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." 3:05:23 PM REPRESENTATIVE ADAM WOOL, BILL SPONSOR, provided a brief statement about the bill. He read the sponsor statement: The ways that Alaskans procure transportation services have changed over time. In the past, getting off a commercial flight and heading to the nearest rental car agency was common practice. Now, consumers are turning increasingly to ridesharing, carpooling, and rental vehicle network options to get around. Vehicle rental networks are rental car businesses that arrange or execute personal passenger vehicle rentals through a network of individual private vehicle owners and are becoming a common alternative to traditional rental car options. HB 102 adds a definition for the new service of providing private vehicle rental programs, including these services into existing statutes that regulate car rental providers to reflect changes in how people secure transport in Alaska. It also extends the same laws and regulations which apply to rental car companies to private vehicle rental networks, including the payment of the State's Vehicle Rental Tax. Therefore, HB 102 brings equity to the rental industry for motor vehicles and will generate additional income for the State's general fund as the private vehicle rental network industry continues to grow and diversify in the Alaskan economy. Please join me in supporting House Bill 102 to bring our statutes up to date and to incorporate this new industry into the existing language governing vehicle rentals in Alaska. Representative Wool compared a peer-to-peer auto rental to Airbnb. He detailed that if an individual wanted to rent out their car, they listed it on a platform such as Turo and paid a fee to Turo. An interested party could rent the car through the platform. He pointed out that Airbnb paid a bed tax in the municipalities that they operated. The bill indicated to the platform companies that the car renter must pay the state vehicle rental tax and any municipal tax, if applicable, and aligned peer-to-peer car rental companies with traditional vehicle rental companies. 3:09:36 PM ASHLEY CARRICK, STAFF, REPRESENTATIVE ADAM WOOL, reviewed the sectional analysis: This bill amends Alaska Statutes 43 and 45. Section 1: States that this act may be known as the "Vehicle Rental Modernization Act." Section 2: Specifies that Alaska's existing Vehicle Rental Tax should be paid by the individual who either provides the leased or rented vehicle, or by a vehicle rental network. Section 3: References the definitions for "Vehicle Rental Business" and "Vehicle Rental Network" in Section 7. Section 4: A "Vehicle Rental Network" is a business that arranges or executes personal passenger vehicle or recreational vehicle rentals, and which is subject to laws which govern vehicle rental businesses, including AS 19.75.915, AS 28.10.375, AS 28.35.320, AS 45.32, and AS 45.45.425-459. Electronic notices or disclosures apply to vehicle rental networks. Section 5: Adjusts language to specify that vehicle rental businesses and individual owners leasing or renting their vehicles should disclose all costs, fees, airport-costs, government taxes, and government surcharges applied to consumers. Section 6: Adjusts language to specify that vehicle rental business may only charge renters or consumers fees relevant to recovering actual costs of operating and must adjust costs based on the actual costs of operation. Section 7: Deletes existing definitions of "car" and "rental car business." Adds new definitions to include passenger vehicles, personal vehicles, and recreational vehicles, vehicle rental businesses and vehicle rental networks. A vehicle rental business can be either a direct renter of vehicles or a vehicle rental network. 3:11:49 PM Representative LeBon asked if a Bed and Breakfast operator offering a peer-to-peer car rental not going through a platform could carry out the transactions on the quiet and not be subject to taxes. Ms. Carrick responded in the negative. She related that the individual would be liable for state and local taxes, but it would be difficult to collect it. Representative LeBon asked if there were individuals on Turo that had multiple vehicles and were essentially running a business. Representative Wool answered that the number of vehicles rented through Turo in Alaska was unknown. Turo refused to release the information to the state. He relayed that the State of Alaska was currently involved in a lawsuit to get Turo to release information about the individuals operating through Turo. He shared from personal experience that he knew someone who operated an Airbnb and ran a multiple vehicle rental through Turo. He was also aware of many people who purchased cars for the sole purpose of renting them out on Turo. He offered that the Turo rentals are often more expensive than the rental car companies' rates. 3:14:45 PM In response to a question by, Representative Knopp, Representative Wool indicated that Turo was not happy with the idea of paying the tax and other technology companies along with Turo were in opposition to the bill. The platforms wanted to negotiate and pay lower tax rates than entities such as Uber and Lyft or through traditional rental car companies. He recounted that Uber, Lyft, and Airbnb had to pay the full amount of applicable taxes. He did not understand the logic for a discounted tax but acknowledged that the car rental platforms made the argument for lower taxes. 3:17:18 PM Representative Carpenter pointed to page 1, lines 11 and 12 of the bill and read, person who provides the leased or rented vehicle; vehicle rental business. He asked if the legislation would apply to a mother and father who rent their vehicle to their child. Representative Wool responded that it was not his intent for family members to have to pay a tax. He reiterated that the intent of the bill was strictly meant for peer-to peer rental platforms. He emphasized that people in the car rental business should pay the tax. He revealed that the state collected over $10 million in vehicle rental tax in the prior year and expected the number would be higher if peer-to-peer rentals were included. He reminded the committee that a rental transaction between two individuals was still liable for the tax. Representative Carpenter wanted to avoid any unintended consequences of a non-business owing taxes. Ms. Carrick interjected that if someone wanted to start their own traditional car rental business with a small number of cars the bill would capture that type of business as well. The bill included any type of car rental business that was a source of income. She recounted testimony in the prior year in the House Labor and Commerce Committee from Brandon Spanos [Deputy Director, Tax Division, Department of Revenue] that it would be unlikely that individuals would do proper reporting to alert the department that taxes were owed making enforcement difficult. 3:21:11 PM Representative Josephson referred to his notes from the previous hearing of the bill. He noted testimony that over 700 peer-to-peer cars were being rented. He asked for an estimate of the amount of income the state was not collecting. Representative Wool responded that presently, Turo would not release information and without the data it was difficult to calculate. He was unaware of the 700 figure. He asked Ms. Carrick if she remembered the testimony. Ms. Carrick recalled that in the prior year a testifier from Turo had roughly estimated the number of owners renting vehicles at 700. She emphasized that the Turo testifier stressed that his number was a very rough estimate. Co-Chair Johnston referenced Representative Wool's account of a person who was running a car rental business through Turo. She wondered if the individual received a vehicle manufacturer's discount as well. Representative Wool did not know the answer to the question. He guessed that the purchases were random. Co-Chair Johnston commented that one platform that was highly likely to pop up in Alaska was the popular scooter rentals. She wondered how it would work with HB 102. Representative Wool replied that he was familiar with the scooter rental. He voiced that it was a vehicle rental platform and wanted to see it under the HB 102 umbrella as a vehicle rental. He did not believe the state should forego potential revenue especially when the traditional vehicle rental companies were collecting it. Co-Chair Johnston reviewed the agenda for the following day. HB 102 was HEARD and HELD in committee for further consideration.