Consumers who use peer-to-peer car sharing services like Turo could soon see the service become more expensive as the Connecticut Transportation Committee has advanced a bill that would subject those services to a sales and use tax. The bill would also repeal a ban on the state studying metrics that have previously been used to assess tolls.
SB 1447 would extend the state’s 9.35 percent sales and use tax that is currently applied to short-term car rentals and leases to peer-to-peer car sharing services when they are leased for less than 30 days. The bill would not apply to “car sharing facilitators,” defined as facilitating at least $250,000 in retail sales annually.
A lower sales and use tax rate of 6.35 percent applies to car rentals and leases for longer periods of time. Peer-to-peer car sharing companies are subject to this tax. Revenue is divided between the General Fund, the Special Transportation Fund, and the Municipal Revenue Sharing Fund. Revenue from the higher sales and use tax in SB 1447 would go solely to the Special Transportation Fund.
The bill requires facilitators to obtain a sales tax permit to collect the sales tax, collect and remit the sales tax, be responsible for all obligations of the tax as if they were the “shared vehicle owner and retailer for the sale,” and keep tax records as required by the Department of Revenue Services.
Similar taxes currently exist for services that facilitate short-term rentals.
If enacted, the bill is projected to add $3.2 million in Special Transportation Fund revenue in both fiscal years 2026 and 2027.
The bill originally contained a 28 cent tax on all retail deliveries in the state, including by Amazon and food delivery services like DoorDash and GrubHub. It would also have applied to small businesses that deliver goods. Testimony at a public hearing on the original bill was overwhelmingly against the retail delivery fee, and a number of groups representing small businesses spoke against it, stating it would make them less competitive.
The bill also contains a section repealing a prohibition on the Department of Transportation (DOT) using state funds to study mileage-based user fees, also known as vehicle-miles traveled (VMT). Studies of VMTs have been previously used to help states set tolls. Connecticut’s ban on studying VMTs was passed in 2017. The bill had over 40 co-sponsors from both sides of the aisle and received hundreds of pieces of testimony, largely from residents opposed to tolls.
During a March 17 meeting where the Transportation Committee voted to advance the bill to the full legislature, committee co-chair Christine Cohen, D-Guilford, said that the repeal of the prohibition on DOT would “unhandcuff” the state. Cohen added that “times have changed significantly” since the bill prohibiting DOT from studying VMTs was put in place and that multiple federal administrations, including former presidents Barack Obama and Joe Biden and current president Donald Trump, have requested state officials to examine the issue.
Sen. Tony Hwang, R-Fairfield, said he “felt very strongly about the bill’s repeal of DOT’s ability to study VMTs and voted against it as a result.
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