car2go is leaving the Twin Cities because taxes are too high

A study says Minneapolis' tax rate for car-sharing is the 10th highest in the U.S.
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A popular car-sharing service is leaving the Twin Cities because taxes are too high.

In a statement to customers Friday, car2go explains that it has been serving Minneapolis since 2013 and St. Paul since 2014. But come Jan. 1, 2017, the little blue shared smart cars will be gone.

"While we have worked hard to support car2go in the Twin Cities, our business has been subjected to extremely high state car rental taxation rates," the statement reads.

The company went on to explain the taxes make St. Paul and Minneapolis one of the most expensive places for car2go to operate. And since the company likes to keep things affordable, it ultimately made the "very difficult decision" to suspend service in Minnesota.

It's last day in operation will be Dec. 31.

There are currently 400 car2go vehicles and about 29,000 members in Twin Cities.

If you have a membership and are wondering what this means for you, click here.

Car2go will continue to operate in eight U.S. cities. It also has locations in Canada. For a full list of cities, click here.

Are Minnesota's taxes that high?

Here's the deal, car-sharing services pay a lot in taxes in general. Forbes, The Wall Street Journal and DePaul University all reported on it over the summer.

According to the Star Tribune, Minnesota's motor vehicle rental car tax is 9.2 percent. Then there's an additional 5 percent fee to help with the cost of registering vehicles. And there’s the general state sales tax (about 6.9 percent), as well as other local taxes. So yeah, that's a lot of taxes.

But how does that compare to other cities?

DePaul did a study and found that Minneapolis' average tax rate for car-sharing is about 22 percent. That's the 10th highest in the country.

Columbus, Ohio and Denver, Colorado are the only U.S. cities that car2go serves with higher tax rates than Minneapolis. Columbus' is about 32 percent and Denver's is 26.

On the other hand, Portland, Oregon – which car2go also serves – is listed at a zero percent tax rate for car-sharing.

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