Legislature(2021 - 2022)BELTZ 105 (TSBldg)
04/07/2022 01:30 PM Senate TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing | |
| HB90 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| *+ | HB 90 | TELECONFERENCED | |
HB 90-VEHICLE RENTALS & VEHICLE RENTAL NETWORKS
1:54:28 PM
CHAIR MYERS announced the consideration of HOUSE BILL NO. 90
am(efd fld) "An Act relating to rental vehicles; relating to
vehicle rental networks; relating to vehicle rental taxes; and
relating to vehicle rental fees."
1:54:45 PM
REPRESENTATIVE ADAM WOOL, Alaska State Legislature, Juneau,
Alaska, sponsor of HB 90, stated that HB 90 does not create a
new vehicle rental tax. The Alaska Vehicle Rental Tax was
created in 2003, charging a 10 percent tax on all vehicles
rented in the state. It raises $10 million annually in revenue
paid by rental car companies. He stated that the Alaska Vehicle
Rental Tax is listed as a line item on the rental car invoice
when consumers rent a car. Consumers pay the tax, and the car
rental company remits the tax to the state.
1:55:57 PM
REPRESENTATIVE WOOL explained that HB 90 would require peer-to-
peer car-sharing rentals, such as Turo, to collect and remit the
tax. When someone rents their personal car to someone else, they
collect the tax and are responsible for remitting it to the
state. He offered his view that most people are unaware of the
quarterly Alaska Vehicle Rental Tax. Some people erroneously
believe that the tax only applies to rental vehicles in
Anchorage because the Municipality of Anchorage charges an 8
percent Vehicle Rental Tax. Several years ago, the Municipality
of Anchorage passed an ordinance stating that peer-to-peer
networks, such as Turo, must remit an 8 percent Vehicle Rental
Tax to the state, in addition to the 10 percent state tax.
REPRESENTATIVE WOOL stated that HB 90 would create a level-
playing field since it would require all rental cars to be
subject to the tax. He acknowledged that the brick and mortar
car rentals, such as Avis, Hertz, or Enterprise, are easy for
the state to locate. HB 90 would make it easier for peer-to-peer
companies to pay the tax. He stated that an amendment on the
House floor would allow those companies renting three or fewer
vehicles to collect an 8 percent tax, and those with four or
more vehicles would collect the full 10 percent Alaska Vehicle
Rental Tax.
2:00:23 PM
KEN ALPER, Staff, Representative Adam Wool, Alaska State
Legislature, Juneau, Alaska, on behalf of the sponsor, stated
that the Vehicle Rental Tax was initiated in 2003 and is
administered by the Department of Revenue's Tax Division.
2:00:48 PM
MR. ALPER reviewed slide 2, Alaska's Vehicle Rental Tax. He
stated that the tax typically raises approximately $10 million
per year. He said that the language reads "lease or rental of a
passenger vehicle in the state," which is broad language
requiring any individual or company that rents vehicles for
money to collect the tax. He noted that the tax has existing
exemptions for large commercial trucks over 8,500 pounds, long-
term or government rentals, taxicabs, and motorcycles. He
indicated that recreational vehicles are subject to a 3 percent
tax rate. He said the program uses a special vehicle tax account
rather than a Designated General Fund (DGF). He characterized it
as an appropriation for tourism marketing, but recently the
funds have been used for state parks or Department of
Transportation and Public Facilities (DOTPF) highway
maintenance.
2:02:07 PM
MR. ALPER clarified that commercial vehicles over 8,500 pounds
were exempt from the tax.
2:02:25 PM
MR. ALPER reviewed slide 3, Trends in the Vehicle Rental
Industry, which read:
• Industry is dominated by large national companies
such as Hertz, Avis, Enterprise, etc.
• There are also smaller local and regional companies,
many of which operate seasonally. These companies
also pay the state's tax
• In recent years, there has been rapid growth of web-
based "peer to peer car rentals, where one person
can rent their car to another through a website
• These websites are known as "vehicle rental
networks
• The trend is prevalent for both regular passenger
cars and trucks (Turo, Getaround) and Recreational
Vehicles (Outdoorsy, RVShare.com)
MR. ALPER noted that the internet trend was for vehicle rental
networks to facilitate that transaction. He characterized Turo
and other similar companies as brokerage entities.
2:03:27 PM
ASHLEY CARRICK, Staff, Representative Adam Wool, Alaska State
Legislature, Juneau, Alaska, Co-presented a PowerPoint on HB 90.
She reviewed slide 4, What Does HB90 Do?
[Original punctuation provided.]
• When someone rents their vehicle through a "vehicle
network" company, their full name and address isn't
visible, making it hard for the Department of
Revenue to reach them to ensure they pay the tax
• HB90 requires a vehicle network company to collect
the tax on behalf of the renter, and remit it to the
state
• The Muni of Anchorage in 2020 passed a similar
ordinance and has been collecting their vehicle
rental tax from network companies
• Anchorage similarly passed an ordinance for Air
BNB to collect their bed tax
• Eliminates the need for car owners to file and pay
the monthly tax themselves.
• Most are not currently paying the tax, so it also
protects them from potential audit liability
• It also sets a lower 8% rate for companies that rent
three or fewer vehicles.
2:05:33 PM
MS. CARRICK reviewed slide 5, Actual Turo Rental Confirmation
2-Day Rental in Anchorage.
A box on the left-hand slide of the tax showed the
base rate of $79 for two days, a trip fee of $30.34,
Sales Tax of $15.07, for a total of $203.41.
The slide read:
Base rent: owner typically gets 75% of this, or
$118.50
The trip fee is a Turo service charge.
8% Anchorage rental tax (charged on both base + trip
fee)
To car owner $118.50 58%
To Turo $69.84 34%
To Anchorage $15.07 8%
Total $203.41
HB90 would add the state tax as an additional line item on
the bill
MS. CARRICK stated that the person paying the tax is the person
renting the vehicle. The tax is passed on to the customer, and
the customer pays the tax.
2:06:39 PM
MS. CARRICK reviewed slide 6, States where Vehicle Rental
Networks are Collecting Tax, consisting of a color-coded map of
the United States, which read:
• 29 States currently apply rental taxes to vehicle rental
networks
• Alaska's current tax rates:
head2right 10% for motor vehicles
head2right 3% for recreational vehicles
• Historically, vehicle rental tax revenue has been around
$10 million, which could increase 10-30% with the
addition of vehicle rental networks.
2:07:30 PM
CHAIR MYERS asked if the vehicle is up for rental on Craigslist
or some other classified site, how HB 90 would affect that type
of rental.
MS. CARRICK related a scenario in which a person had four
vehicles listed on Craigslist, the person would be responsible
for obtaining a business license and remitting the tax. She
pointed out that Craigslist was not considered a vehicle rental
network.
2:08:24 PM
MR. ALPER stated that the Department of Revenue tracks people in
the ad hoc car rental business. Although the department does
reach out to people to collect the Vehicle Rental Tax, this bill
is not designed for that but is geared for online software
rentals.
2:08:53 PM
CHAIR MYERS expressed concern that it would create a large
loophole if the state were to collect 5 percent of those listed
on Craigslist rather than 95 percent.
MR. ALPER noted it was his impression that the prevalence of
Craigslist rentals has gone down in recent years due to the
growth of the car rental platforms. He stated that it was easier
to list vehicles using websites like Turo rather than placing an
ad on Craigslist.
2:09:58 PM
SENATOR KIEHL said he had used Turo. He asked how this would
differ from collecting and remitting local sales taxes. He noted
that the Turo receipt lists a line for sales tax.
MR. ALPER stated that the Juneau sales tax is not a listed line
item on Turo receipts. Juneau does not have an ordinance that
mandates it. Anchorage passed an ordinance, so the Municipality
of Anchorage Vehicle Rental Tax lists the tax on receipts.
2:11:25 PM
SENATOR KIEHL related his understanding that the City and
Borough of Juneau has an ordinance that requires sales tax to be
listed separately on each receipt.
2:11:45 PM
CHAIR MYERS related that there is a carve-out for owners of
three or fewer vehicles. He wondered about an estimate of the
number of owners listing on the Turo platform with three or
fewer vehicles.
MS. CARRICK answered that it would be difficult to determine
because they have limited data on individual renters. She said
it would likely be easy for a person to create two profiles.
2:12:42 PM
SENATOR KIEHL asked whether the liability falls on the network
rather than the vehicle owner.
MR. ALPER responded that the liability for the network is to
collect and remit the tax. He suggested that if the tax were
collected but not remitted, it would be a whole different level
of crime than not collecting the tax. He explained that the tax
liability ultimately depends on the person renting the vehicle.
However, if the tax is collected via the transaction on Turo,
the vehicle owner has met their obligation.
MR. ALPER said a lot of the debate on the House floor related to
an individual making a few extra dollars to help their family.
However, many people who use the site are commercial operators
with 10 or more vehicles. The idea of creating a carve-out for
the small owner of three or fewer vehicles was designed to give
the benefit that the person warranted paying a lower tax rate
without providing a blanket exemption to everyone using the
platform.
2:14:38 PM
SENATOR MICCICHE related his understanding that HB 90 requires
the collection of the Alaska Vehicle Rental Tax via the vehicle
company. He noted that the amendment process dropped the rate on
peer-to-peer rentals.
MR. ALPER clarified that it dropped the rate on peer-to-peer
networks where the vehicle owner lists three or fewer cars. He
stated the larger peer-to-peer rentals would pay the rate. He
agreed that it moves the obligation to the company to collect
the tax, but it forces them to register with the Department of
Revenue, file a return, and remit the taxes on behalf of the car
owners that use their network.
2:15:26 PM
CHAIR MYERS related his understanding that part of the
justification for the bill is to level the playing field for
Turo and legacy brick and mortar car rental companies. He
wondered if there were other differences between a private owner
and a car rental company. For instance, in terms of insurance,
once a company reaches a certain size, they are eligible for
fleet rates. He asked what type of benefits car rental companies
receive.
MR. ALPER answered that, to a certain extent, the industry was
more qualified to respond. He noted that the networks require
robust insurance and newer vehicles. He referred to slide 5 to
the typical base rent of 75 percent. He stated that the car
owner might receive 80 or 60 percent, depending on the level of
risk the owner takes. For instance, if the owner were ready to
absorb more responsibility for damage, Turo would pay a more
significant percentage.
2:17:15 PM
MS. CARRICK added that the Division of Motor Vehicles indicated
that it does not provide discounts for traditional car rental
agencies for registering their vehicles.
2:17:33 PM
CHAIR MYERS asked whether car rental agencies receive any
discounts when purchasing large numbers of vehicles.
MS. CARRICK deferred to Mr. Alper.
MR. ALPER agreed that it might occur to a certain extent, but if
so, it would mean that they should be able to rent their cars
for less. He noted that the car rental and peer-to-peer rentals
use business models. The current law requires that anyone who
rents a vehicle for money owes the Alaska Vehicle Rental Tax.
2:19:02 PM
CHAIR MYERS opened public testimony on HB 90.
2:19:25 PM
KYNDELL GAGLIO, Government Relations & Legislative Counsel, Turo
Inc., San Francisco, California, stated that Turo is the largest
peer-to-peer car-sharing network. Its mission is to put the
world's 1.5 billion cars to better use. She stated that she was
joined by Sean Vinck, their associate general counsel. She asked
members to oppose HB 90 because it is an unfair to regulate and
tax constituents and visitors who use car sharing. Turo, Inc.
owns no vehicles and doesn't have any employees in Alaska, but
Alaska residents who own vehicles can share them through the
marketplace. She estimated that people earn on average $200 per
month by car sharing. People use their income to pay for
groceries, rent, car payments, or student loans.
MS. GAGLIO stated that several platforms exist in other markets,
but Turo is currently the only one operating in Alaska. She
noted that Turo was not part of the process of developing the
bill, nor has there been meaningful stakeholder engagement. She
stated that HB 90 will harm these small businesses and the
locals and visitors who benefit from them by establishing a new
tax that treats locals like a large rental company without
considering the many benefits car rental companies receive but
members' constituents using car sharing do not.
2:21:22 PM
MS. GAGLIO listed some benefits to car rental companies
including their ability to purchase cars at discounted wholesale
rates rather than paying the retail rate for their vehicles. Car
rental companies pass through car registration costs by tacking
them on as vehicle licensing fees. Car rental companies received
millions of dollars in Coronavirus Aid, Relief, and Economic
Security Act funding and many states passed on sales taxes to
their renters. Car rental companies receive special discounts on
insurance. She stated that Turo supports fair regulation and
taxation for peer-to-peer car sharing and encourages the state
to put forth a bill that considered the disparities just
mentioned. She referred to a recommended model by the National
Council of Insurance Legislators (NCOIL). She questioned the
timing of the tax bill because Alaskans still suffer
financially. At the same time, the US faces severe car shortages
so the timing might inhibit members' constituents from earning
these extra dollars, while providing locals with much needed
transit.
2:22:56 PM
MS. GAGLIO stated that since the pandemic began, there has been
dramatic trend toward local usage. The tax would ultimately
apply to locals.
2:23:32 PM
SENATOR KIEHL asked for the percentage of local renters of cars
on the platform in Alaska.
MS. GAGLIO deferred to Mr. Vinck.
2:24:14 PM
SEAN VINCK, Associate General Counsel, Turo, Inc., San
Francisco, CA, Alaska, introduced himself.
2:24:33 PM
SENATOR KIEHL asked for the percentage of local renters of
vehicles listed on the platform.
MR. VINCK asked if he was interested in the share of the market.
SENATOR KIEHL recalled Ms. Gaglio mentioned that Alaskans were
renting vehicles on this platform, and that trend was going up.
He was curious about the number of Alaskans renting on the
platform.
MR. VINCK said he did not have the exact number of people
listing their vehicles on the platform. He offered to try to get
those figures.
2:25:37 PM
SENATOR MICCICHE asked what proportion of vehicles rented in
Alaska are peer-to-peer compared to traditional car rental
agencies. He further asked what portion of peer-to-peer was on
the platform versus private bulletin board rentals on Facebook,
Craigslist, or small community bulletin boards.
MR. VINCK answered that he could not provide the exact
information since some of it is proprietary information. He
offered his view that peer-to-peer was the minority compared to
car rentals. He responded that he did not have the exact number
of individuals using Turo. Still, according to their survey, 84
percent of the people sharing vehicles did so on Turo rather
than using a bulletin board.
2:27:14 PM
SENATOR MICCICHE asked whether 84 percent included all platforms
or Turo only.
MR. VINCK stated that the survey was not specific to Turo, so he
thought it referred to platforms at large.
2:27:51 PM
MR. VINCK related that many states had addressed peer-to-peer
car sharing through regulation. It is generally done using model
legislation to address consumer protection, public safety, and
insurance. This legislation addresses peer-to-peer car sharing
through taxation. He suggested a more comprehensive approach.
2:28:29 PM
MR. VINCK recalled that 29 states applied a peer-to-peer rental
car tax, but that figure is inaccurate. He stated that New York
was cited as a state that applied the same rental taxes to peer-
to-peer and car rental. However, New York enacted a law this
year that provides a lower rate of excise taxes for peer-to-peer
as opposed to car rental companies. Florida was one state that
was cited as having the same rate as peer-to-peer, but Florida
enacted a $1 per day instead of $2 per day for peer-to-peer
rentals. Several other states, including Ohio, were cited as
applying a state rental tax. However, Ohio does not have a
statewide rental tax. Indiana, Tennessee, and Oklahoma were
cited as applying a retro tax to peer-to-peer. Still, each of
states had enacted legislation to apply a lower rate for peer-
to-peer rentals. Most states that have examined this issue give
a lower rate to peer-to-peer transactions than car rentals,
including no excise tax or some lower special tax that applies
only to peer-to-peer rentals.
2:30:06 PM
SENATOR MICCICHE expressed an interest in reviewing the data and
sources. He asked whether states not carrying over the rental
car excise tax to platforms chose to do so or if they had not
yet taken action.
2:30:36 PM
MR. VINCK responded that states fall in both categories. For
example, Florida, Tennessee, Oklahoma, Virginia, Indiana,
Illinois, and New York have acted to apply the lower rate to
peer-to-peer networks. Other states, such as Ohio, currently do
not have a rental tax. Some states, such as Pennsylvania, have
not yet acted on vehicle rental taxes.
SENATOR MICCICHE expressed his interest in reviewing their data.
MR. VINCK offered to provide the information to the committee.
SENATOR MICCICHE indicated that he had reviewed NCOIL's model
act, which was helpful information.
2:32:29 PM
ASHLEY SUTTON, Executive Director, TechNet, Northwest Region,
Olympia, Washington, spoke in opposition to HB 90. She stated
that TechNet is a trade association representing over 90 iconic
companies. Peer-to-peer car sharing companies host the platform
that connect vehicle owners to people who need access to a car,
including Alaska residents. It provides users more choices by
allowing car-owning Alaskan residents an opportunity to rent
their cars. She characterized TechNet as innovative, with a
fundamentally different business model from car rental
companies.
MS. SUTTON spoke in opposition to HB 90, which would impose a 10
percent tax on vehicle car-sharing platforms or an 8 percent tax
for individual consumers. She urged members to follow model
legislation adopted by NCOIL known as the Peer-to-Peer Car
Sharing Act, covering consumer protection and minimum insurance
coverage and licensing verification. Based on the robustness of
the underlying Act, TechNet strongly encourages the committee to
reference the heavily vetted model and work with stakeholders to
craft legislation that appropriately addresses this business
model.
MS. SUTTON stated that as many small businesses attempt to
recover from the pandemic, TechNet recognizes the value of car
sharing and the income-generating opportunities the peer-to-peer
model offers Alaskans, the tourism industry in Alaska, and the
broader economic ecosystem. She said HB 90 would stifle
innovation and harm the Alaskan economy.
2:34:11 PM
SENATOR KIEHL noted that he had not reviewed NCOIL's model. He
wondered how peer-to-peer was different and why it should have a
different tax rate.
MS. SUTTON asked for clarification on the question.
2:35:46 PM
SENATOR MICCICHE offered to clarify Senator Kiehl's question. He
asked why the peer-to-peer approach was different. He stated
that the tax rate appears to be the same in Alaska for peer-to-
peer and car rental companies. He acknowledged that legislators
interpret a level-playing field differently depending on the
industry. He asked why the state should tax peer-to-peer
platforms at a different rate. The bill would require peer-to-
peer platforms to collect the Alaska Vehicle Rental Tax at a
lower rate. He asked why peer-to-peer platforms are different,
if so if they should be taxed differently, and at what rate.
MS. SUTTON responded that TechNet believes policymakers should
ensure that efforts to regulate the sharing economy protect
innovation and not be overly burdensome. TechNet recognizes the
unique nature of the sharing economy compared to traditional
providers.
SENATOR MICCICHE asked if she was legal counsel to TechNet.
MS. SUTTON answered no.
SENATOR MICCICHE expressed his interest in the industry
differences between peer-to-peer platforms and traditional car
rental companies to understand better why they should be taxed
differently. He recalled earlier testimony that peer-to-peer
platforms maintain their cars differently, do not receive tax
breaks, and did not receive CARES relief. He asked whether the
legislature should consider a different tax rate for certain
factors.
MS. SUTTON offered to check with TechNet's membership and report
to the committee.
2:39:33 PM
BRIAN ROTHERY, Vice President, Governmental and Public Affairs,
Enterprise Holdings, St. Louis, Missouri, stated that Enterprise
Holdings did not receive any CARES Act funding. He offered his
view that HB 90 does not accomplish much. It takes an existing
tax and requires peer-to-peer platforms to collect and remit the
tax because they are in the best position to do so. It makes a
small concession to offer a lower rate, such as Florida's
reduction from $2 to $1, and 8 percent in Alaska instead of 10
percent. Enterprise Holdings finds that acceptable because it is
a larger company.
MR. ROTHERY indicated that Enterprise Holdings is interested in
competing with a level-playing field, competing in a marketplace
where government doesn't direct people to one competitor or
another through policy. He stated that he did not understand why
his customers should pay higher taxes than peer-to-peer
platforms, especially in Alaska.
2:41:00 PM
MR. ROTHERY related that he had participated in the debate in
other states. He stated that he helped develop NCOIL's Model
Act. In most other states, the debate had centered on the notion
that some Turo owners may have paid sales tax when they bought
their car. However, sales tax has not been part of the issue in
Alaska.
MR. ROTHERY said he did not understand why peer-to-peer
platforms would not accept a lower rate and agree to collect and
remit the tax on behalf of their customers as they have agreed
to in other states.
MR. ROTHERY stated that Enterprise Holdings completely supports
the NCOIL model since they helped develop it. He pointed out
that the second clause in NCOIL's model states that it does not
address taxation. Thus, NCOIL's Model Act can move forward
without specifically addressing taxation. He said that
Enterprise Holding's position has always been that if states
take the step of using NCOIL model and the definition, they
must also address taxes. He noted that NCOIL's model separates
taxes from rentals.
MR. ROTHERY pointed out that he keeps hearing the word
"sharing, but it is actually "renting." He stated that peer-to-
peer platforms rent cars. He offered strong support for HB 90 in
its current form.
2:43:29 PM
SENATOR MICCICHE stated his appreciation for Mr. Rothery's
directness. He clarified that most communities in Alaska pay
sales tax, but Anchorage residents do not.
2:44:38 PM
CHAIR MYERS asked what advantages rental car companies have that
Alaska citizens do not. He wondered whether Enterprise Holdings
pays a lower car insurance rate for the same coverage for
individuals.
MR. ROTHERY answered that Enterprise Holdings obtains a self-
insurance certificate, so the company does not purchase
insurance.
CHAIR MYERS asked whether Enterprise Holdings obtains a discount
rate from car manufacturers when it purchases new vehicles due
to the volume of cars.
MR. ROTHERY answered that it stands to reason that volume
discounts generally occur. For example, Hertz announced that
they were purchasing 100,000 Tesla cars. Mr. Musk responded on
Twitter that Hertz was paying the full retail price for the
Tesla cars. Thus, it is not universally true that car rental
companies always receive discounts especially when supply is
tight. He wondered what incentive a manufacturer would have to
sell cars to Enterprise when it could sell them at full retail
value to another customer. He offered his view that there were
market forces on both sides, so there wasn't an easy answer.
Although some volume discounting occurs, it is probably less
than some think. He was unsure this was the appropriate venue to
discuss car rental companies' relationship with their
manufacturers and the prices they pay for their cars.
2:47:07 PM
SENATOR MICCICHE stated his support for capitalism and profit.
He said that Enterprise Holdings is a $57 billion company that
benefits from bulk purchasing, maintenance, and sales. The
current full retail purchase was likely a temporary supply
situation.
2:47:57 PM
SENATOR MICCICHE said he wants to consider everything to make a
fair decision about HB 90. He offered his view that car rental
companies, such as Enterprise Holdings, compete with a growing
mom-and-pop industry that does not receive those benefits. He
stated that he supports the car rental business model but
focuses on determining the appropriate tax rates for peer-to-
peer companies.
MR. ROTHERY asked the record to reflect that he represents
Enterprise Holdings, which operates Enterprise, Alamo, and
National car rental brands. The company is not publicly traded
but is a privately held company. He stated that Enterprise began
with a fleet of seven cars in 1957 and remained relatively
small, predominantly in neighborhoods. He began working for
Enterprise Holdings 25 years ago when the company did not have
an airport branch but one nearby. His job was to drive the
shuttle to pick up customers from the Saint Louis airport. He
stated that the company understands hard work and growing the
business, which it did not inherit from shareholders. Instead,
Enterprise Holdings is very much in tune with the bare bones
aspect of running a business, only recently accelerating growth
into the airport market. He related that Enterprise Holdings
found a way to compete within the rules. The company had
consistently applied the vehicle rental tax to their customers,
even as a small company. They never falsely argued that they
were something different from a car rental. He offered his view
that companies can succeed within a basic policy framework that
treats the transaction similarly.
2:51:16 PM
SENATOR MICCICHE said he stood corrected and was unaware that
Enterprise Holdings was still privately held.
2:51:44 PM
CARRIGAN GRIGSBY, Director, Sales and Real Estate, Avis Alaska,
Anchorage, Alaska, stated that Avis Alaska is a statewide
company. He offered his view that Enterprise Holdings and Turo
were "battling it out" in numerous places, so their arguments
were on a bigger scale than his. He indicated his focus was on
Alaska, noting that Avis Alaska is the largest car rental
company in the state in terms of the number of locations and
fleet size. Avis Alaska has 130 employees and has rented cars in
Alaska since 1955. The company pays millions in rental car taxes
to municipalities, boroughs, and the state and federal
government.
2:53:15 PM
MR. GRIGSBY offered his view that it is Avis Alaska's legal and
ethical responsibility as a corporate citizen to pay vehicle
rental taxes. Their customers drive on the roads, stop at
pullouts, and use parks, campgrounds, docks and facilities so
they understand the need for a state vehicle tax. He said it
seems disingenuous to argue about the terminology. From January
2020 through March 2022, Avis Alaska has paid $3.3 million in
Alaska Vehicle Rental Taxes to the state. Avis Alaska collects
the tax from its customers. He noted that last summer the
question was why rental cars were not available and this year
people wonder why the rentals are so expensive. He acknowledged
that rental car companies have experienced a huge fleet
shortage.
MR. GRIGSBY said he is happy that Turo operates in Alaska
because the company provides cars that are needed in the market.
He said he had used Turo as a host and rental. He characterized
Turo as providing a good niche for its customers. He offered his
view that it was impressive that Turo could argue they shouldn't
pay the tax. He agreed with Mr. Rothery that car rental
companies have some advantages. He agreed that peer-to-peer
networks could be charged a lower rate of 8 percent rather than
the 10 percent charged to Alaska car rental companies. However,
he disagreed that peer-to-peer platforms should be exempt from
the tax.
2:57:20 PM
SENATOR KIEHL asked about the potential differences between
peer-to-peer networks and car rental companies. He wondered
whether car rental franchises qualified for CARES loans and
grants.
MR. GRIGSBY answered yes. He said the Juneau Economic
Development Corporation (JEDC) did a superb job. Avis Alaska
received tax incentives for businesses but suffered a 50 percent
loss. Instead of laying people off, they used the CARES funding
to keep their employees employed.
SENATOR KIEHL stated that the Juneau Economic Development
Corporation contracted for the state.
2:59:24 PM
SENATOR KIEHL noted that he had never rented a car with more
than 10,000 to 15,000 miles, but he has rented cars from Turo
with significantly more. He wondered about car rental companies'
mileage rules and whether they were government-imposed.
MR. GRIGSBY answered that mileage was industry driven. He stated
that the Anchorage International Airport has language regarding
the maximum mileage in its lease. He offered his view that no
one currently enforces those rules. He noted that Avis Alaska is
spending money on tires and parts that it does not normally pay
for because it usually sells the cars before replacements are
needed. He noted that all the companies are operating higher
mileage vehicles out of necessity due to vehicle shortages.
3:01:23 PM
SENATOR MICCICHE explained that the typical larger company
business model is that used car sales finance new car purchases.
He offered his view that it turned the industry upside down when
the travel industry declined during COVID-19. Companies were
forced to sell their vehicles to stay in business. He said that
it has been tough to recover. He indicated that people
anticipated that new cars would be available, which hasn't
happened and has exacerbated the problem.
MR. GRIGSBY agreed that there is a considerable gap in the
market. He acknowledged that Avis Alaska waited it out a few
months before selling their fleet, partly because they could
rent to a significant number of tourists traveling to Alaska in
2020 via the airlines.
3:03:35 PM
SENATOR MICCICHE said that the tourism industry on the Kenai
Peninsula did well last year due to independent travelers. He
offered his belief that the car rental companies and peer-to-
peer companies should be able to dovetail, with Turo picking up
the slack in the summer.
3:04:36 PM
SENATOR KIEHL recalled several years ago that the Municipality
of Anchorage added an excise tax for vehicle rentals. He asked
about Avis Alaska's customer response to the added charge.
MR. GRIGSBY responded that the Anchorage International Airport
is the only international airport in Southcentral Alaska, so it
wasn't as though customers could avoid the charge. He offered
his view that increasing vehicle rental taxes for Turo or other
rideshare companies would not cause travelers to avoid coming to
Alaska during the summer. He explained that Avis Alaska offers
car rental services in downtown Juneau for cruise passengers who
are willing to pay for the convenience of quickly accessing
their car rental even if they are paying an extra 10 percent in
vehicle rental taxes.
3:07:08 PM
CHAIR MYERS closed public testimony on HB 90.
CHAIR MYERS held HB 90 in committee.
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