State Reversing Rental Car Fee After Legal Snafu

Mar 27, 2019

Credit Wikipedia/Creative Commons

The State Tax Office has notified 300 rental car companies that a law implemented at the beginning of the year is flawed and that a $2 fee must apply to tourists and residents alike.

Rental car companies were charging visitors a $2-a-day fee, generating revenue for the state highway fund used to repair and maintain roadways.

But a serious oversight by the attorney general’s office left taxpayers open to a lawsuit challenging the constitutionality of the law, according to Linda Chu Takayama, state tax director.

"Under the Constitution, under the commerce clause, you really can't have a separate category for residents and non-residents," she told HPR's The Conversation. "We had to call a halt to that as soon as we found out. We told the rental car companies to stop charging, stop collecting that additional fee."

In the meantime, the state Legislature is moving a bill that would have the $2 surcharge apply to everybody,  both residents and non-residents.

Lawmakers are hearing the measure, Senate Bill 162, today in the House Finance Committee at 2 p.m. in conference room 308 at the state Capitol.

To hear the Conversationʻs interview with the tax director, visit the showʻs webpage.