ARA says stimulus package 'critical' for rental industry

The American Rental Association (ARA) has repeated its call for an economic stimulus package for the equipment rental industry. The ARA wants a package that would extend tax relief of capital expenditure and boost spending on infarstructure.

The ARA supports a two-year extension of Section 179 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 measures would provide rental businesses with capital to purchase new fleet.

Infrastructure spending would help rental houses by providing equipment for jobs across the nation. The call comes days before President-elect Barack Obama is sworn in as the 44th President of the United States. Obama has said at least $675 billion will be spent over two years as a part of the package, with a majority of the money slated for infrastructure projects.

"We are at a critical time with the current economic situation," said Christine Wehrman, executive vice president and CEO of the 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."

The call for the stimulus package follows a similar plea by the ARA in early November last year. Then, in a joint initiative with the Associated Equipment Distributors (AED), Association of Equipment Manufacturers (AEM) and the North American Equipment Dealers Association, it urged the US Senate and House of Representatives to increase federal infrastructure spending and to extend by the capital investment incentives.

There are more than 1,100 OEMs in the US which make up a $35.3 billion industry and more than 4,000 equipment rental businesses employ "tens of thousands," the ARA said.

In addition to what has been outlined, the ARA also supports the proposed five-year carry-back on net operating losses.

In a joint effort with IHS Global Insight, the ARA will release its third annual 2008 State of the Equipment Rental Industry report, which will illustrate for the first time a decline in the size of the rental industry.