Cato Institute urges U.S. Supreme Court to take Arizona rental car case

Photo by formulanone /Flickr/CC BY-SA 2.0

By Jeremy Duda | Arizona Mirror

An Arizona company wants the U.S. Supreme Court to overturn a tax on rental cars that it says unconstitutionally discriminates against out-of-state renters, and it’s getting some help from a powerhouse libertarian think tank.

Saban Rent-A-Car challenged a rental car surcharge in Maricopa County that funds the debt service for State Farm Stadium, where the Arizona Cardinals play. 

Since 1991, car rentals have been subject to a $2.50 surcharge. Maricopa County voters in 2000 changed that to $2.50 or 3.25 percent of a company’s gross proceeds, whichever is greater, with the difference going to the Arizona Sports and Tourism Authority to pay off debt from the construction of the stadium. The authority receives about $14 million annually from the surcharge, which is one of several revenue sources used to pay off the stadium debt.

The additional surcharge exempts several types of car rentals that are predominantly used by Arizona residents, such as short-term replacement vehicles, off-road vehicles and buses. Saban’s attorneys argue that, because it primarily applies only to rentals that are used almost exclusively by out-of-state tourists, it violates the dormant Commerce Clause of the U.S. Constitution, which prohibits states from restricting or burdening interstate commerce.

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