The Carwash Association of Pennsylvania (CAP) supports the exemption of carwashing services from the state sales tax. The following are the primary reasons CAP believes the state sales tax on carwash services needs to be repealed:
- Double Taxation:
Carwash owners should not have to pay sales or use tax on all supplies and equipment purchased to operate their facilities as well as collect or pay, in many cases, sales tax on the gross receipts for the washing and cleaning of motor vehicles.
- Small Business Economy:
All carwash operations in Pennsylvania are small businesses and small businesses are a primary component of the Commonwealth's economic engine. The additional sales tax payment that must be paid on the gross receipts for the washing and cleaning of motor vehicles can negatively impact this segment of the small business economy.
- Environmental Impact:
Carwashes are more "environmentally friendly" than individuals washing their vehicles at home. The average professional carwash uses 75% less water to clean a vehicle than if an individual washes his vehicle at home. Exemption from sales tax would allow carwash owners to use these funds toward the purchase or maintenance of water reclamation systems or the ability to connect to a public sewer system as needed to comply with costly and burdensome environmental regulations.
- Outdated Tax on Services:
The "washing, cleaning, waxing, polishing and lubricating of motor vehicles" has been subject to Pennsylvania sales tax since 1959 (1959 P.L. 733). Coin-operated technology was, for the most part however, unavailable to the carwash industry until the 1970s. It would have been difficult for legislators imposing the tax to foresee how unfair and burdensome it would be upon the industry. Legislators did recognize the unfairness of taxing coin-operated technology, however, when they exempted coin-operated laundry facilities in 1971 (1971 P.L. 437) from sales tax. It is now time to eliminate the tax on carwash facility operators.
- Job Creation/Economic Development:
Carwash operations require employees. Additional revenue resulting from sales tax exemption can be reinvested in maintaining current employees or can be used to hire additional employees.
- Vehicles are a necessity:
The General Assembly recognizes the policy of exempting necessities from sales and use tax and a well-maintained vehicle is a necessity in today's world. Pennsylvania law requires operators of motor vehicles to maintain the vehicles so that views through windows are unobstructed and that registration plates are legible (i.e. mud or dirt do not create unsafe driving conditions or obscure the plate).
