Legislature(2019 - 2020)BARNES 124
04/08/2019 03:15 PM House LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB30 | |
| HB102 | |
| HB91 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 102 | TELECONFERENCED | |
| *+ | HB 103 | TELECONFERENCED | |
| += | HB 91 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 30 | TELECONFERENCED | |
HB 102-RENTAL VEHICLE BY PRIVATE OWNER
3:41:55 PM
CO-CHAIR LEDOUX announced that the next order of business would
be HOUSE BILL NO. 102, "An Act relating to rental vehicles;
relating to vehicle rental networks; relating to liability for
vehicle rental taxes; and providing for an effective date."
3:42:22 PM
CO-CHAIR LEDOUX opened public testimony.
3:42:39 PM
ETHAN WILSON, Government Relations Manager/Legal Counsel, Turo,
stated that Turo is an internet-based peer-to-peer car sharing
platform. He expressed Turo's opposition to HB 102 in its
current form, adding that they are, however, willing to help
develop a legislative solution that works for Alaska and its
citizens, protects consumers, and recognizes an individual's
personal property right to share his or her car without undue
burdens or barriers to entry. He offered his belief that HB 102
takes a one-sided approach to regulating peer-to-peer car
sharing that is an "antiquated, complex, and corporately
manipulated" attempt at regulating and taxing the industry. He
reiterated that the peer-to-peer car sharing industry is willing
to engage with Alaska's lawmakers to create a "smart, new, and
innovative regulatory structure for the sharing economy." He
contended that it is consumers, not rental car companies, who
pay sales and excise taxes to rent cars. He further alleged
that rental cars, hotels, lodging, and resorts are targeted for
excise taxes due to their high rate of consumption by travelers
from out of state, adding that "by taxing peer-to-peer car
sharing in the same manner as big rental, the legislature,
albeit inadvertently, is not capturing the economic activity of
out of state actors - rather, it would be capturing locally
sourced economic activity." He reported that while peer-to-peer
car sharing platforms take 25 percent of the overall transaction
cost, Alaskans that share their cars keep up to 75 percent of
the gross revenue of that transaction. He opined that HB 102
treats Turo and peer-to-peer car sharing as an enemy.
3:50:04 PM
REPRESENTATIVE FIELDS asked if Turo is the equivalent of Airbnb
for renting vehicles.
MR. WILSON stated that it's an asset sharing economy, not a gig
sharing economy, adding that the very nature and use of [cars
and houses] are inherently different.
REPRESENTATIVE FIELDS offered that both [companies] are digital
platforms that enable property owners to rent their property.
He asked if Mr. Wilson agreed.
MR. WILSON answered yes.
REPRESENTATIVE FIELDS asked if Mr. Wilson is familiar with
Airbnb's payment of occupancy taxes around the world.
MR. WILSON replied that he is not an expert in public policy for
Airbnb.
REPRESENTATIVE FIELDS explained that Airbnb negotiates with
jurisdictions to pay occupancy taxes around the world. He
disputed the idea that no one from the legislature offered to
work with Turo, adding that he had asked the company's lobbyist
to review their equitable tax proposal.
REPRESENTATIVE FIELDS asked how much money Turo has earned in
Alaska.
MR. WILSON said he is unsure of the exact number.
3:51:52 PM
REPRESENTATIVE FIELDS asked if Mr. Wilson was aware of the
Department of Revenue's inquiries to determine how much money
Turo has earned in Alaska.
MR. WILSON said he is not familiar with those specifics.
REPRESENTATIVE FIELDS asked if he would be sharing the amount of
money Turo has earned in Alaska with the committee today.
MR WILSON replied that he would try.
REPRESENTATIVE FIELDS stated that the legislature received
letters from Alaskans suggesting that HB 102 would prohibit or
ban peer-to-peer vehicle sharing. He asked if Turo was behind
those "misleading" letters.
MR. WILSON said he's not familiar with any misleading letters.
REPRESENTATIVE FIELDS asked if Turo has suggested that HB 102
would somehow prohibit peer-to-peer vehicle sharing in Alaska.
MR. WILSON answered that he has not and was not familiar with
the communications being referred to.
3:53:38 PM
REPRESENTATIVE STUTES asked for the location of Turo's
headquarters.
MR. WILSON relayed that they are located in San Francisco,
California.
REPRESENTATIVE STUTES questioned whether Turo makes revenue off
the vehicle rentals.
MR. WILSON answered yes, adding that they generally take 25
percent of the gross revenue of each transaction.
REPRESENTATIVE STUTES asked why it's okay to have a business in
Alaska that doesn't pay any of Alaska's business taxes.
MR. WILSON maintained that Turo is not anti-tax or against
creating a tax that is designed to capture aspects of the
sharing economy. He reiterated the desire to work with the
legislature on establishing what the taxation framework would
look like.
3:54:45 PM
REPRESENTATIVE STUTES presumed that if there were to be a tax
increase on Turo rental vehicles, that it would be paid by the
renter rather than the vehicle owner.
MR. WILSON acknowledged that [the tax] would be paid by the
consumer of the transaction, noting that it would increase the
cost of the total transaction. He contended that peer-to-peer
transactions are inherently different than rental car
transactions because peer-to-peer transactions are locally
sourced.
REPRESENTATIVE STUTES questioned whether Turo has any bricks-
and-mortar stores in Alaska.
MR. WILSON replied that there are over 700 Alaskan hosts on
their platform; however, no stores are in the state.
REPRESENTATIVE STUTES asked if they offer any vehicle
maintenance or if they just collect 25 percent of each
transaction.
MR. WILSON explained that Turo establishes the framework for the
platform. He noted that all the rental vehicles are owned by
individual Alaskans in a dispersed ownership model, which "is
the beauty of the sharing economy."
REPRESENTATIVE STUTES questioned whether Turo is involved in any
other businesses aside from the vehicle sharing.
MR. WILSON answered no. He said to the best of his knowledge
they are a peer-to-peer car sharing platform.
3:57:15 PM
REPRESENTATIVE HANNAN asked how many states Turo operates in and
how many states they are paying tax revenue in.
MR. WILSON stated that they operate in 49 states and are paying
tax revenue in Maryland after working with the state legislature
to create a tax framework that is separate from the rental car
framework.
3:57:49 PM
REPRESENTATIVE HANNAN asked what the peer-to-peer tax rate is in
Maryland.
MR. WILSON replied that every state's taxation framework is
different. He offered his understanding that Maryland has a
combination of both a statewide sales tax and an excise tax. He
further noted that, in Maryland, peer-to-peer car sharing is
subject to an excise tax that is less than the rental car excise
tax.
REPRESENTATIVE HANNAN asked if Mr. Wilson was aware of Alaska's
sales tax.
MR. WILSON shared his understanding that there is no statewide
sales tax; however, municipalities have the option to collect a
city sales tax. He added that there is a statewide excise tax
on rental cars.
REPRESENTATIVE HANNAN asked if Mr. Wilson was informed of
Alaska's locally sourced rental car companies, which have no
affiliation to national corporations. She pointed out that
those companies are fully culpable for state rental car taxes.
MR. WILSON suggested that those transactions are taxable as a
rental car transaction as they are rental car companies.
REPRESENTATIVE HANNAN inquired as to how many rental days it
would take to establish the arrangement as a business rather
than a peer-to-peer transaction.
MR. WILSON said that would be a policy decision for the
legislative body.
4:00:36 PM
CO-CHAIR LEDOUX addressed the taxes and "other fees" that Mr.
Wilson said the rental companies charge to recoup the amount
they have expended in collecting taxes. She asked what the
"other fees" are.
MR. WILSON offered his understanding that it is a "cost recovery
mechanism" that is statutory and related to an estimate on what
the rental car company's expenses would be for registering
vehicles every year. He further alleged that the fee is one
dollar and thirteen cents per day per transaction.
CO-CHAIR LEDOUX sought clarification on how peer-to-peer vehicle
rental concerns in-state people, whereas car rental companies
deal with out-of-state people.
MR. WILSON asserted that the way peer-to-peer vehicle
transactions are sourced helps to facilitate "locally-sourced"
transactions due to the dynamic of the app platform.
CO-CHAIR LEDOUX asked if there are any statistics that support
that statement.
MR. WILSON said he did not have those figures. Nonetheless, he
pointed out that there are 14,000 people in Alaska that are
active on the Turo platform.
CO-CHAIR LEDOUX sought clarification on how Turo's ideal piece
of legislation would be different than the current bill.
MR. WILSON replied that there is certain language they would
include that is conducive and friendly to the sharing economy
that defines it distinctly from the rental vehicle business. He
emphasized the importance of making sure there are consumer
protections and adequate insurance protections, and a fair
taxable framework.
4:05:37 PM
CO-CHAIR WOOL sought clarification on the definition of
"sharing" when it involves a monetary transaction.
MR. WILSON explained that the ownership of that vehicle is the
relevant aspect. He offered his belief that sharing is when an
individual has bought a car for personal use and lets someone
else drive it in exchange for financial remuneration.
4:06:41 PM
CO-CHAIR WOOL, referencing Airbnb, said that an individual can
stay at a private residence that is lived in by someone else in
exchange for financial remuneration. He asked if that could be
considered sharing.
MR. WILSON acknowledged that, yes, if a residence is personally
owned and "shared" with someone else then it would be considered
sharing.
CO-CHAIR WOOL suggested that if Mr. Wilson came from San
Francisco to Alaska to testify he might be armed with data. He
asked for last year's gross revenue from the Turo hosts in
Alaska.
MR. WILSON answered, on average, 300 dollars per month.
CO-CHAIR WOOL asked how much revenue Turo grossed in 2018.
MR. WILSON said he did not know that exact number.
CO-CHAIR WOOL asked if Turo is a multinational company.
MR. WILSON affirmed that.
4:12:20 PM
REPRESENTATIVE FIELDS inquired as to whether Turo had paid any
taxes to the state of Alaska for the vehicle rentals that they
enable through a digital platform.
BRANDON SPANOS, Deputy Director, Tax Division, Department of
Revenue, noted that, normally, he would not be able to answer
that question due to specific statutes on confidentiality;
however, in the case of this new industry, he said he can state
that the division has not received revenue from any peer-to-peer
car sharing company.
REPRESENTATIVE FIELDS asked if it's the division's position that
[peer-to-peer vehicle sharing] does represent a form of car
rental and that either the company, the customers, or the car
owners should be paying vehicle rental taxes.
MR. SPANOS answered yes, they would define it as a rental, in
which case the statute clearly states that a tax is due.
REPRESENTATIVE FIELDS stated that, under current law, individual
Alaska car owners are "on the hook" for paying these taxes;
however, if this bill passed, it would clarify that customers
would be paying the taxes. He asked if that was an accurate
understanding.
MR. SPANOS clarified that the renter of the vehicle, the Alaskan
resident putting their vehicle available for rent, would be the
taxpayer. He noted that there is a question as to whether Turo
would also be a taxpayer, as they previously testified that they
are collecting 25 percent of the revenue.
4:18:00 PM
REPRESENTATIVE STUTES calculated that Turo is generating
approximately 2.5 million dollars from their rentals here in
Alaska, of which they are netting 650,000. She asked what the
taxes on that would be.
MR. SPANOS said 250,000 dollars, which is 10 percent of the
transaction.
4:19:05 PM
REPRESENTATIVE HANNAN asked how much revenue Alaska made in 2018
from rental car taxes.
MR. SPANOS answered 10.5 million dollars.
REPRESENTATIVE HANNAN questioned whether the Tax Division
verifies business licenses, liability insurance, and vehicle
registration.
MR. SPANOS stated that it depends on the tax type, adding that
in the case of the vehicle rental tax they simply collect the
tax and do audits to verify that the gross receipts were valid.
REPRESENTATIVE HANNAN asked how many businesses that rent
vehicles in Alaska pay taxes to the state.
MR. SPANOS relayed that in FY18 there were 142 taxpayers, of
which they received 514 quarterly tax returns.
4:21:21 PM
REPRESENTATIVE TALERICO questioned whether there are incentives
built into the rental vehicle statute or if is a flat 10 percent
for cars and 3 percent for recreational vehicles (RVs).
MR. SPANOS shared that there are certain credits available, such
as discounts for state business.
REPRESENTATIVE TALERICO asked if rental company cars are
considered private vehicles for rent.
MR. SPANOS explained that the statute refers to them as
"passenger vehicles," adding that they don't differentiate
private from corporate owned.
4:22:54 PM
CO-CHAIR WOOL asked how much revenue Alaska made from rental car
taxes in years prior to 2018.
MR. SPANOS reported 11.9 million in FY17, 10.5 million in FY16,
and 9.7 million in FY15.
4:23:42 PM
CO-CHAIR LEDOUX sought clarification on the Tax Division's
attempt to subpoena records from peer-to-peer companies.
MR. SPANOS explained that there are technicalities in the
statute that must be changed in order to enforce the tax
subpoena on out-of-state companies; therefore, they could not
obtain records from those companies.
CO-CHAIR LEDOUX questioned whether it's common for companies to
voluntarily open their records.
MR. SPANOS said it happens often, adding that, usually, a
subpoena isn't necessary.
CO-CHAIR LEDOUX asked if Turo is paying the corporate income
tax.
MR. SPANOS replied that can't speak to that for confidentiality
reasons.
4:26:21 PM
REPRESENTATIVE FIELDS offered support for the [peer-to-peer]
business model. Nonetheless, he shared his belief that the
company's refusal to pay taxes is insulting. He asked for the
market capitalization of Turo.
MR. WILSON said he was unsure.
REPRESENTATIVE FIELDS, referencing "public sources", asserted
that the market capitalization of Allstate, Turo, and Getaround,
which are three peer-to-peer car sharing companies, totals
approximately 32 billion dollars. He further noted that there
is a difference between innovation and rent seeking, the latter
being when you manipulate laws to find a tax advantage. He
opined that innovation should be supported rather then rent-
seeking behavior that distorts marketplaces.
4:28:18 PM
REPRESENTATIVE HANNAN inquired as to how Turo verifies that the
cars being rented through their app are legally registered and
carry the proper insurance.
MR. WILSON explained that Turo has partnered with Liberty Mutual
to provide "robust" insurance protections on every transaction
that takes place on their platform. He noted that they always
offer the state mandated minimums for the driver of each
vehicle.
REPRESENTATIVE HANNAN questioned whether a Liberty Mutual
inspector looks at each vehicle prior to it being "shared."
MR. WILSON answered no.
REPRESENTATIVE HANNAN asked how Turo knows that each vehicle is
legally registered and safe to drive in Alaska.
MR. WILSON replied that there is a self-regulating aspect in
that all the vehicles are personally owned and should already be
legally registered if it's being driven around by the owner in
the first place.
4:31:24 PM
REPRESENTATIVE HANNAN established a scenario in which someone
places their vehicle that has a bald tire up for "sharing" and
the consumer rents it, drives away, and gets into a major car
crash with substantial injuries. She asked who would be liable.
MR. WILSON shared his understanding that it would have to be
litigated by attorneys afforded by the insurance provider to
determine who was at fault and whether there was any negligence.
REPRESENTATIVE HANNAN questioned whether Turo would have any
responsibility in the court.
MR. WILSON relayed that Turo assumes the liability of their
hosts, adding that the drivers' culpability is determined by the
court.
4:33:32 PM
WILLIAM BAILEY disclosed that he is an operator of Turo in
Anchorage. He expressed his opposition to HB 102. He opined
that when innovative industries offer cheaper and better
alternatives the large corporations feel threatened by
competition and possible loss of revenue. He stated that Turo
offers a more personal experience than renting, as well as an
option when rental companies are low on inventory.
4:36:06 PM
REPRESENTATIVE FIELDS asked what a reasonable tax amount would
be for vehicles being "shared."
MR. BAILEY opined that a reasonable tax would be 5-7 percent.
4:37:10 PM
REPRESENTATIVE HANNAN asked what kind of vehicle Mr. Bailey
"shares" and how much he charges.
MR. BAILEY said he shares his Jeep Wrangler for anywhere from
40-60 dollars per day, depending on the time of year.
REPRESENTATIVE HANNAN inquired as to how Mr. Bailey reports the
revenue that he generates through Turo on his income taxes.
MR. BAILEY stated that he reports it as a secondary source of
income.
REPRESENTATIVE HANNAN asked if Mr. Bailey should have to carry a
business license if he shares his vehicle for a substantial
amount of time.
MR. BAILEY answered no, "because I'm not the one running the
business."
4:39:06 PM
CO-CHAIR LEDOUX asked what percentage of his renters are from in
state versus out of state.
MR. BAILEY surmised that 75-80 percent are in state and 20-25
percent are out of state.
4:40:10 PM
ROSE FELICIANO, Regional Director, Internet Associations,
informed the committee that Internet Associations represents
more than 40 of the world's leading internet companies. She
expressed her opposition to HB 102, stating that they are not
opposed to ensuring the vehicles are safe and properly insured;
however, she said, they believe the tax structure should be more
appropriate for their business model.
4:45:17 PM
REPRESENTATIVE STUTES asked where Internet Associations is
located.
MS. FELICIANO said they have headquarters in Washington, DC and
several other offices across the country.
REPRESENTATIVE STUTES asked if Internet Associations has any
branches in Alaska.
MS. FELICIANO answered no.
4:46:51 PM
REPRESENTATIVE HANNAN asked which internet businesses Internet
Association represents aside from peer-to-peer car sharing
companies.
MS. FELICIANO said that they represent Airbnb, Zillow, Yelp,
Uber, Lyft, Postmates, Quicken Loans, Groupon, and others.
REPRESENTATIVE HANNAN questioned whether Internet Associations
objects to those companies paying statewide sales taxes in
states they operate in.
MS. FELICIANO offered her belief that the tax should be
appropriate. She referenced two of the companies that Internet
associations represents, Amazon and Etsy, adding that they now
pay state taxes after the Supreme Court decision ruled that
remote sellers are required to pay them.
REPRESENTATIVE HANNAN, referencing Ms. Feliciano's written
testimony, asked why HB 102 would make it "impossible" for peer-
to-peer vehicle sharing to operate in Alaska.
MS. FELICIANO stated that there is a fundamental concern from
the peer-to-peer vehicle sharing category about being
categorized as a rental car company.
[HB 102 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2019.HB102.Sponsor Statement.pdf |
HL&C 4/8/2019 3:15:00 PM |
HB 102 |
| HB 102.Bill Version U.pdf |
HL&C 4/8/2019 3:15:00 PM HL&C 4/15/2019 3:15:00 PM HL&C 4/22/2019 3:15:00 PM |
HB 102 |
| 2019.HB102.Sectional.pdf |
HL&C 4/8/2019 3:15:00 PM |
HB 102 |
| HB 102.Fiscal Note DOR.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM HL&C 4/15/2019 3:15:00 PM HL&C 4/22/2019 3:15:00 PM |
HB 102 |
| HB 102.Fiscal Note DOL.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM HL&C 4/15/2019 3:15:00 PM HL&C 4/22/2019 3:15:00 PM |
HB 102 |
| HB 102.Backup Opposition Alliance of Automobile Manufacturers.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM HL&C 4/15/2019 3:15:00 PM HL&C 4/22/2019 3:15:00 PM |
HB 102 |
| HB 102.Backup Support Letter Enterprise.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM HL&C 4/15/2019 3:15:00 PM |
HB 102 |
| HB 102.Backup Opposition Letters 4.8.19.pdf |
HL&C 4/8/2019 3:15:00 PM |
HB 102 |
| HB 102.Backup Internet Association Opposition.pdf |
HL&C 4/8/2019 3:15:00 PM HL&C 4/15/2019 3:15:00 PM |
HB 102 |
| HB 30.Sponsor Statement.pdf |
HL&C 3/25/2019 3:15:00 PM HL&C 4/5/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 30 |
| HB 30.Bill Version S DRAFT.pdf |
HL&C 4/5/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 30 |
| HB 30.Fiscal Note DOLWD.pdf |
HL&C 4/8/2019 3:15:00 PM |
HB 30 |
| HB 30.Backup PPI Cost Increase Estimate.pdf |
HL&C 3/25/2019 3:15:00 PM HL&C 4/5/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 30 |
| HB 30.Backup PPI By State.pdf |
HL&C 3/25/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 30 |
| HB 30.Backup Similar Legislation.pdf |
HL&C 4/8/2019 3:15:00 PM |
HB 30 |
| HB 30.Backup Workers Comp Benefits.pdf |
HL&C 3/25/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 30 |
| HB 30.Backup Insurance Pay Outs.pdf |
HL&C 4/8/2019 3:15:00 PM |
HB 30 |
| HB 91.Sponsor.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Bill Version M.PDF |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Sectional.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Fiscal.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Backup Naturopathic Regulation.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Backup Naturopathic Perscriptive Authority.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Backup Naturopathic Medicine Background.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Backup Naturopath One-Pager.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Backup Naturopathic Concerns and Answers.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Backup Education and Scope Comparison.pdf |
HL&C 4/3/2019 3:15:00 PM HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Backup Perscriptive Authority Comparison.pdf |
HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Backup Support Letters UPDATED 4.8.19.pdf |
HL&C 4/8/2019 3:15:00 PM |
HB 91 |
| HB 91.Backup Response to Committee Questions.pdf |
HL&C 4/8/2019 3:15:00 PM |
HB 91 |