Legislature(2023 - 2024)SENATE FINANCE 532
01/29/2024 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB127 | |
| SB170 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 127 | TELECONFERENCED | |
| *+ | SB 170 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 127
"An Act relating to vehicle rental taxes; relating to
the issuance of subpoenas related to tax records; and
providing for an effective date."
9:02:40 AM
Co-Chair Olson recounted that the bill had been heard in
committee the previous week. He noted that there would be
two additional invited testifiers, after which the
committee would hear public testimony.
9:03:16 AM
SEAN VINCK, ASSOCIATE GENERAL COUNSEL, TURO INC.,
TELECONFERENCE (via teleconference), commented that the
legislation had been considered before, and wanted to offer
two observations. He addressed the tax rate, and believed
that the rate that should apply to peer-to-peer (P2P) car
rentals should be different than the rate applied to
commercial car rentals. He thought there were additional
advantages that car rentals enjoyed in the state, such as
vehicle license fees, which were not available to peer-to-
peer car sharing hosts. He pointed out that the rental car
industry was allowed to purchase rental vehicles without
having to pay sales tax in jurisdictions in Alaska. He
proposed that there should be a preferential lower tax rate
for P2P car sharing, in recognition of the advantages
available to car rentals and not P2P car sharing.
Mr. Vinck addressed the provision of the bill that allowed
for retroactive application of a tax, which if enacted,
imposed a new duty of peer-to-peer car sharing platforms.
The tax would be collected to remit to the state on
transactions. He asserted that basic principles of fairness
and law suggested that the provision should apply on a
prospective rather than retroactive basis.
Co-Chair Hoffman recounted that the previous week he had
queried the Department of Law about any differentials that
might exist in other states. The department had indicated
that there were minimal, if any. He referenced a rate
sheet. He asked if Mr. Vinck could address differing rates.
9:06:18 AM
AT EASE
9:09:36 AM
RECONVENED
Co-Chair Olson noted that the document referred to by Co-
Chair Hoffman was entitled "Rental Car & P2P Car Sharing
Tax Comparison" (copy on file) and had been distributed to
members.
Co-Chair Hoffman reiterated that he asked Mr. Vinck to
address the issue of if there were differences in tax rates
between rental car companies and car sharing entities.
Mr. Vinck looked at the chart on the document, and
explained that jurisdictions in the country that had begun
to regulate P2P car sharing differentiated the tax rate
between it and typical car rental businesses. He used the
example of the state of Oklahoma, where rental cars enjoyed
the benefit f no tax on P2P car sharing transactions. He
noted that in Oklahoma, rental car companies had the
benefit of purchasing vehicles without paying sales tax. He
mentioned the state of Arizona, where rental car taxes were
abated for P2P car sharing. Arizona also exempted car
rental companies from sales tax on vehicle purchases. He
mentioned that Illinois had exempted P2P car sharing from
the state automobile rental occupation tax as well as
county and municipal auto rental occupation taxes.
Mr. Vinck continued to reference examples in other states.
He noted that generally P2P car sharing paid sales tax on
vehicle purchases while car rentals did not. Generally, the
states that had begun to address P2P car sharing had
recognized the difference between the two industries and
had reflected that difference in a lower tax rate
applicable to P2P car sharing.
9:12:46 AM
Senator Kiehl asked Mr. Vinck to discuss whether the states
he mentioned had the marketplace facilitator collect and
remit the tax, or if it was on the oriingal car share
owner.
Mr. Vinck thought just about every state had imposed a
markeplace facilitator. That facilitator used a platform
and transferred the obligation from the owner of the car to
the platform.
Senator Kiehl understood that the bill would address the
issue. He noted that Alaska had no state sales tax. He
asked Mr. Vinck to discuss the advantage or disadvantage an
individual car share business owner would have relative to
a traditional car rental owner in Juneau when it came to
business personal property tax.
Mr. Vinck was not familiar with the Juneau personal
property tax. He thought the municipal sales tax in Juneau
was not applicable to rental car businesses acquisition of
vehicles.
Senator Kiehl thought that the City and Borough of Juneau
exempted the first $100,000 of business and personal
property from paying the property tax. He considered that a
traditional rental car company with a sizable fleet paid on
almost everything it had while the individual car owner
paid next to nothing for the tax. He thought there was a
comparable dynamic at the state level with corporate income
tax for oil and gas companies. He asked Mr. Vinck if he
recalled what the rate traditional car rental companies
paid to the state in corporate income tax.
Mr. Vinck was not familiar with corporate income tax, and
noted that his comments were in relation to the
transactional sales tax that the consumer paid.
Senator Kiehl thought the amount was higher than 9 percent,
and a car share owner would not pay the tax.
Senator Wilson wondered how many individual Turo accounts
were in the state.
Mr. Vinck did not have the number available but agreed to
follow up with the committee at a later time.
9:16:06 AM
CARRIGAN GRIGSBY, EXECUTIVE VICE PRESIDENT, AVIS ALASKA
(via teleconference), explained that Avis was a family
employee-owned company with multiple locations in the
state. He wanted to clarify that the law clearly required a
person that rented a car in Alaska to pay the Car Rental
Tax. He posited that the bill as written would require the
business owner to pay the tax instead of the renter. He
cited that Avis Alaska submitted millions of dollars of tax
revenue every year, but remitted the tax from the renter
instead of paying it themselves. He thought there was a
growing issue of personal car rentals with no tracking
mechanism. He emphasized that the renter of the P2P cars
would be paying the tax. He assumed a large majority of P2P
car renters would not realize they owed the tax.
9:19:42 AM
Mr. Grigsby asserted that there was a matter of fairness to
consider. He thought there was up to 198 companies listed
in the Municipality of Anchorage with mom and pop car
rental companies. He thought the companies would be at a
disadvantage when Turo companies could offer cheaper rates.
He pointed out that most rental companies did not purchase
vehicles in Juneau and added that Avis paid a big tax
yearly.
Co-Chair Hoffman commented that there were obviously flaws
in the original bill, which was why the committee was
looking at the current bill by Senator Claman. He thought
the original bill may not have been small business
friendly. He referenced spreadsheets that showed which
states that had been small business friendly. He commented
that maybe the committee should consider doing what other
states had done.
Co-Chair Stedman wanted to address a broader concept. He
commented on the small road system in the state and the use
of the Alaska Marine Highway System in Southeast. He noted
that many of his constituents could not bring a car to
Juneau when coming to go shopping. He thought the situation
was not dissimilar to other areas of the state. He wanted
to look into what the state collected from citizens for the
rental tax. He considered not collecting rental tax for
those that did not have the option of bringing a car.
9:24:18 AM
Co-Chair Olson OPENED public testimony.
9:24:27 AM
AMY BOS, NET CHOICE, WASHINGTON D.C. (via teleconference),
spoke in opposition to the bill. She explained that Net
Choice was a Washington, D.C. trade association, which
encouraged the committee to oppose the legislation. She
discussed support for car-sharing platform companies such
as Turo and Get Around, which helped people supplement
income. She explained that Net Choice viewed the bill as
problematic as it failed to take into account that
traditional rental car companies enjoyed discounts and
sales tax exemptions on purchases and were also allowed to
pass costs on to customers. She contended that P2P car
sharing companies did not enjoy the same benefits and would
be put at a disadvantage. She thought the bill opened up
the door for the Department of Revenue (DOR) to go after
back taxes for locals engaged in P2P car sharing. The
organization would welcome further clarification to ensure
the legislation did not apply retroactively. She urged the
committee not to advance the legislation.
Senator Kiehl asked if Ms. Bos could point to the statute
that would stop a car share owner from including costs such
as licensing in the price.
Ms. Bos was not aware of anything in Alaska law that would
stop the owner from doing so.
9:27:02 AM
ROBERT SINGLETON, CHAMBER OF PROGRESS, SANTA CRUZ, CA (via
teleconference), testified in opposition to the bill. He
explained that Chamber of Progress was a technology
industry coalition that promoted technologys progressive
future. He asserted that the bill would hinder competition
and limit consumer choice when it came to rental car
options. He encouraged the committee to consider an
alternative regulatory framework that gained support from
the incumbent rental car industry and P2P car sharing
companies. He mentioned proven environmental and economic
benefits, encouraging more efficient use of personal
vehicles to result in less need for ownership, garages, and
storage. He pointed out that P2P would help individuals
earn more funds to assist with the rising cost of living.
He summarized that P2P car sharing options could help users
with access to important services.
Mr. Singleton continued his remarks. He opposed the
retroactive taxation provision. He thought the bill would
result in a disproportionate burden on P2P companies, which
would be treated similarly to traditional car rental
companies with regard to taxation but without the
additional benefits. He urged the committee to adopt a
compromise regulatory framework that the stakeholders had
agreed on through a consensus model.
Senator Kiehl considered the Version U Committee Substitute
passed from the Senate Transportation Committee. He did not
see a retroactivity clause for the duty to collect and
remit for marketplace facilitators.
Mr. Singleton was not certain of an answer. He was
generally opposed to having retroactive taxes.
Senator Kiehl noted that it was possible to do retroactive
taxes, but it must be done explicitly, and he did not see
it in the bill.
Co-Chair Hoffman believed the testifier had indicated that
the current situation was that taxes were due but had not
been collected, so DOR was retroactively seeking to collect
the taxes. He thought the matter needed to be clarified and
that the committee should amend the bill to prevent the
department from collecting the taxes retroactively.
Senator Kiehl noted that there was some limitation on
seeking retroactive taxes from the vehicle owner. He
thought that there was nothing in the bill that would allow
the department to retroactively seek taxes from the
marketplace facilitator.
Chair Olson asked if Senator Kiehl indicated that he wanted
to hear from the Department of Law.
Senator Kiehl thought it would be great to hear a
perspective from the Department of Law.
9:31:51 AM
AT EASE
9:32:03 AM
RECONVENED
TREVOR CONSOLIVER, ASSISTANT ATTORNEY GENERAL, OIL AND GAS
SECTION, DEPARTMENT OF LAW (via teleconference), introduced
himself and asked Senator Kiehl to repeat the question.
Senator Kiehl understood that the current bill placed a
limit on retroactively collecting tax from a vehicle owner
but thought there was nothing to allow DOR to retroactively
collect tax from a marketplace facilitator such as Turo or
Get Around. He asked if Mr. Consoliver interpreted the bill
to allow DOR to retroactively collect tax from a
marketplace facilitator.
Mr. Consoliver believed Senator Kiehl's analysis was
correct. He thought Section 4 of the bill only allowed the
Department of Law to go back and collect the existing taxes
from vehicle owners and did not retroactively apply to the
vehicle rental platforms.
9:33:46 AM
TYNDALL ELLIS, CHUGACH STATE PARK CITIZEN ADVISORY BOARD,
ANCHORAGE (via teleconference), spoke in support of the
bill. He relayed that the Chugach State Park Citizen
Advisory Board was a 15-member board, and members all lived
in the Anchorage area. He understood that vehicle owners
already owed the tax, however the state was unable to
identify the owners. He asserted that the Vehicle Rental
Tax was very important to state parks and made up almost
half of the Alaska State Parks operating budget and had
been close to $5 million the previous year. He recounted
that Vehicle Rental Tax dollars that were left over were
often appropriated by the legislature to Alaska State Parks
to deal with deferred maintenance, which was about $90
million and growing. He thought a tax from vehicle rental
platforms was a step in the right direction.
9:36:12 AM
DENNIS HULL, AMERICANS FOR TAX REFORM, ANCHORAGE (via
teleconference), testified in opposition to the bill. He
relayed that Americans for Tax Reform was a national
taxpayer advocacy group. He shared concern about
retroactive tax collection. He recommended that the bill
include clear language that indicated to DOR or any other
agency from collecting taxes for years prior to the
enacting of the bill. He urged the committee to tailor the
legislation around the differences between traditional car
rental business and car sharing models, which he believed
should be treated differently under state law. He
referenced HB 90 [legislation from 2021 related to vehicle
rental taxes and fees], which provided for a lower tax rate
of 5 percent for car sharing individuals.
Mr. Hull seconded Co-Chair Stedman's suggestion that the
state eliminate the car rental tax outright. He thought DOR
had only collected $10 million on average for rental taxes
over the previous four years. He supported slashing taxes
for all participants. He spoke of the importance of the car
sharing industry.
9:38:35 AM
NICOLE STEWART, SELF, FAIRBANKS (via teleconference), spoke
in opposition to the bill. She relayed that she was a Turo
owner. She referenced earlier comments and supported the
comments of the Avis representative and the general counsel
of Turo. She pondered that any collection of retroactive
taxes would be extremely problematic. She thought there
should be collaboration to contribute to the state and
state parks.
Ms. Stewart pointed out the importance of Turo in the
state. She referenced recent minus temperatures and noted
that many people with rental vehicles had been stuck around
town due to lack of winterization. She noted that Turo
owners were familiar with the climate and had vehicles with
snow tires. She mentioned heavy snowfalls in Anchorage and
the need for safer vehicles.
9:41:41 AM
BRANDON SPANOS, ACTING DIRECTOR, TAX DIVISION, DEPARTMENT
OF REVENUE (via teleconference), conveyed that he was
available for questions.
Co-Chair Stedman asked if Mr. Spanos could assist the
committee with bifurcating the tax and determine how much
tax was paid by the residents and non-residents when
renting cars.
Mr. Spanos suggested that the Department of Law address Co-
Chair Stedman's question. He shared concern about the
commerce clause issue. He noted that taxes could not apply
differently to residents and non-residents. He did not have
the information requested. He noted that car rental
companies collected the tax directly from customers and
could have more information, while the department received
the funding and number of rentals only.
Mr. Consoliver thought that the commerce clause could be a
potential concern. He requested to follow up with the
committee at a later time.
9:44:00 AM
Co-Chair Hoffman thought there were several examples of
disparity of taxes. He mentioned exemptions for senior
citizens, and a disparity for many types of licenses. He
used the example of fishing licenses, for which residents
paid less. He asserted that it was not uncommon for the
state to have a differential for different classes of
people. He did not support the argument.
Senator Wilson thought the purpose of the bill was to go
after small car rental companies or companies with a used
car fleet using Turo to avoid state taxes. He asked if
there was a way to separate the bill in order to go after
larger businesses rather than individual Alaskans.
Mr. Spanos could not speak to the purpose of going after
any group, and did not think the administration held any
position to do so. He noted that the departments position
was that tax was due, and it had an obligation to collect
the tax from the vehicle owners, whether it be a business
or an individual. He thought as the bill was written, it
would limit the department's ability to do so. Under
current statute, if an individual did not file a tax
return, there was no statute of limitations and the
collection could go back ten years.
Senator Wilson relayed that he would follow up with the
bill sponsor and perhaps the department.
9:46:48 AM
Co-Chair Olson CLOSED public testimony.
Co-Chair Olson set an amendment deadline for the following
Thursday at 5 oclock.
SB 127 was heard and HELD in Committee for further
consideration.
9:47:03 AM
AT EASE
9:49:34 AM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 127 Americand For Tax Reform Opposition .pdf |
SFIN 1/29/2024 9:00:00 AM |
SB 127 |
| AARP Supports Senior Benefits Reauthorization.pdf |
SFIN 1/29/2024 9:00:00 AM |
SB 170 |
| SB 170 DOH SBPP 012224.pdf |
SFIN 1/29/2024 9:00:00 AM |
SB 170 |
| SB 170 Sectional Analysis. 1.12.24.pdf |
SFIN 1/29/2024 9:00:00 AM |
SB 170 |
| SB 170 Sponsor Statement 1.12.24.pdf |
SFIN 1/29/2024 9:00:00 AM |
SB 170 |
| Senior Benefits Fact Sheet.pdf |
SFIN 1/29/2024 9:00:00 AM |
SB 170 |