Most automobile rental compnies are driving through a legal loophole to avoid buying District of Columbia license tags for the cars they rent in the city, the D.C. auditor has reported.
As a result, Auditor Matthew S. Watson reported to the City Council last week, the city is losing an estimated $150,000 a year in tax revenues.
Watson recommended that the city take steps to force the companies to register their cars locally. At least three council members said they would support such steps.
Watson said 17 firms operate 21 rental offices in the city. Although there are an estimated 72,000 rental transactions in the city each year, Watson said the companies have registered only 245 cars here. Most are registered in Virginia, he said.
Among the major firms, only Avis - whose slogan is "We try harder" - has registered what Watson considered a fair share of its cars in the city. Avis has 184 cars with D.C. tags. The tags on rental cars have the prefix, "R."
By contrast, Watson said, industry leader Hertz has only one registered vehicle, National has two and both Budget and Econo-Car have none. A lesser-known firm, Foreign Service Auto Rental, has 27 locally registered cars, Watson said.
A Hertz spokesman in New York said his company will take steps promptly to register more cars in the District.
Although Watson concluded that the city is "not being treated equitably by rental car firms," he acknowledged that D.C. law contains a loophole that makes the situation legal.
"The city has no law defining how many vehicles in a rental fleet must be registered in the city," Watson said.
Many states, including both Maryland and Virginia, are covered by a registration plan administered by the American Association of Motor Vehicle Administrators. Under the plan, a rental car fleet would register vehicles in each jurisdiction in proportion to the amount of business it does there.
Invoking such a plan in the District would add 750 cars here, Watson estimated. The tax yield would be $150,000 a year. Watson submitted a draft of legislation he said would carry this out.
Marion S. Barry Jr., chairman of the council finance and revenue committee, and Council Member Polly Shackleton said they would support the proportional registration. Council Member Douglas E. Moore said he would go farther and require that all cars rented in the city carry D.C. tags.