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Rental industry supports economic stimulus

March 1st, 2009 / By: / Industry News

The American Rental Association (ARA) advocates an economic stimulus package that provides tax relief to spur investment in the rental industry, along with significant spending on infrastructure that will help lift the declining equipment rental industry. More than 4,000 equipment rental businesses and 1,100 equipment manufacturers in the U.S. make up this $35.3 billion industry, which employs tens of thousands of workers and does business in all 50 states. The economic downturn has serious implications for the equipment rental industry; as a leader in that industry, the ARA stresses the importance of action to help the U.S. economy and the rental industry rebound.

Specific provisions supported by the ARA include a two-year extension of Section 179 expensing for small businesses, with a $250,000 annual expensing limit for businesses with an aggregate annual investment in qualifying equipment of $800,000 or less, and a two-year extension of the 50 percent bonus depreciation. These terms will allow rental businesses to purchase new equipment and recapitalize their rental fleet when the economy recovers. The ARA also supports the proposed five-year carry-back on net operating losses.

Investment in the nation’s infrastructure is another key element of any stimulus package. Spending on infrastructure will provide a positive return for rental companies who provide capital equipment for these projects, which would also create more employment opportunities in rental stores and equipment suppliers, as well as at infrastructure job sites. The ARA is calling for quick action from the U.S. House and Senate to approve both the tax and spending portions of the infrastructure package.

“The price of inaction is too great to ignore,” says Christine Wehrman, ARA executive vice president and CEO. “Our preliminary analysis suggests a steep decline in rental revenue in 2009 and into 2010, so a robust and well-crafted stimulus package is critical to our sizable industry.”

The ARA released its “State of the Equipment Rental Industry” in February. A joint project with IHS Global Insight, a leading economic forecasting firm, the report shows, for the first time in its three-year history, a decline in the size and shape of the equipment rental industry. For more information from ARA, visit www.ARArental.org.

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