The American Rental Association last week advocated an economic stimulus package providing tax relief that spurs investment in the rental industry along with significant spending on infrastructure that will help lift the declining equipment rental industry. Noting that more than 4,000 equipment rental businesses and 1,100 equipment manufacturers in the U.S. make up the $35.3 billion rental industry, ARA said that the economic downturn has serious implications on the forecast and continued vibrancy of the equipment rental industry.
Specific provisions supported by 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 allow for rental businesses to purchase new equipment and recapitalize their rental fleet when the economy rebounds. In addition, ARA supports the proposed five-year carry-back on net operating losses.
Investment in our nation’s infrastructure is another important element of a stimulus package designed to aid the weakening equipment rental industry, ARA said. Spending on infrastructure will provide a positive return for rental companies who provide capital equipment required for these projects. Projects created under the economic stimulus will also create more employment opportunities in rental stores, equipment suppliers and at infrastructure jobsites. ARA called for quick action from the House and Senate to approve both the tax and spending portions of the infrastructure package.
“We are at a critical time with the current economic situation,” said Christine Wehrman, executive vice president and CEO of ARA. “The price of inaction is too great to ignore. As the industry leader, we must be a strong advocate for measures that will bring about improvement in the economy. 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.”
In February, ARA will release the 2008 State of the Equipment Rental Industry report, a joint project with IHS Global Insight, an economic forecasting firm. This is the third annual report, but is the first to illustrate a decline in the size and shape of the equipment rental industry.
Based in Moline, Ill., The American Rental Association is an international trade association for the owners of equipment rental businesses, and the manufacturers and suppliers of construction/industrial, general tool, and party/event rental equipment.