The American Rental Association (ARA) is advocating an economic stimulus package that provides tax relief that spurs 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 United States make up this $35.3 billion industry, which employs tens of thousands and does business in all 50 states. The economic downturn has serious implications on the forecast and continued vibrancy of the equipment rental industry, according to ARA.
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 allow for rental businesses to purchase new equipment and recapitalize their rental fleet when the economy rebounds. In addition, the ARA supports the proposed five-year carry-back on net operating losses.
Investment in the nation’s infrastructure is another important element of a stimulus package designed to aid the weakening equipment rental industry. 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 also will create more employment opportunities in rental stores, equipment suppliers and at infrastructure job sites, according to the ARA. The ARA calls 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. The price of inaction is too great to ignore,” said Christine Wehrman, executive vice president and CEO of ARA. “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, the ARA will release the 2008 State of the Equipment Rental Industry report, which is 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.
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