Alaska Governor Vetoes Bill to Clarify Turo Tax Collection, Leaving Dispute Unresolved

Alaska's governor has vetoed a bill that aimed to resolve the ongoing dispute between the state and car-sharing platform Turo over the collection of rental car taxes. The bill, which had garnered bipartisan support in the legislature, would have placed Turo in charge of collecting the taxes and reduced the rate for Turo-like rentals. However, the governor, citing the need to avoid "unnecessary taxation of a new and growing industry," has decided to veto the measure, leaving the issue unresolved.

Navigating the Murky Waters of Car-Sharing Taxation

A Contentious Dispute

The dispute between the state of Alaska and Turo has been ongoing for several years. The Alaska Department of Revenue has asserted that Turo is subject to the state's 10% sales tax on rental cars, but Turo has argued that its users, not the company itself, are liable for collecting the tax. The state had previously sued Turo in an attempt to determine the amount of tax revenue owed, but the outcome of that legal battle remains unclear.

Attempted Resolution

In an effort to resolve the issue, the Alaska legislature passed Senate Bill 127, which was sponsored by Senator Matt Claman, D-Anchorage. The bill would have placed Turo in charge of collecting the rental car tax and reduced the rate to 8% for Turo-like rentals. The bill garnered widespread bipartisan support, but the governor's veto has effectively nullified the legislative consensus.

The Governor's Rationale

In his veto message, the governor argued that "unnecessary taxation of a new and growing industry is bad public policy." This stance suggests a desire to foster the growth and development of the car-sharing industry in Alaska, even if it means foregoing potential tax revenue. The governor's decision has been met with disappointment from legislators, who had hoped the bill would provide a solution that worked for all parties involved.

Unresolved Consequences

With the veto, the long-running dispute between the state and Turo remains unresolved. The Department of Revenue had previously suspended tax collections from Turo users in 2023, anticipating the passage of the bill. However, now that the bill has been vetoed, the status of those tax collections is unclear.Additionally, the bill had included a liability shield for Turo users who owed back taxes. Without this protection, Alaskans who have rented their vehicles through Turo remain liable for those unpaid taxes, and the state may continue to pursue them.

Legislative Frustration

The governor's veto has been met with frustration from legislators who had worked to find a solution that satisfied all stakeholders. Representative Andy Josephson, D-Anchorage, who sponsored the bill in the House, expressed his disappointment, stating that the veto "makes it very hard for legislators to want to see problems, find solutions that are achievable, and invest energy in those solutions."The governor's decision is the eighth veto of a policy bill in 2024 and the 13th since he took office in 2018. This pattern of vetoes has led some lawmakers to question the value of their legislative efforts, as the governor's actions have repeatedly undermined the consensus-building process.

Uncertain Path Forward

Despite the setback, legislators like Senator Claman have expressed a commitment to revisiting the issue and reintroducing legislation to resolve the dispute. However, the path forward is not entirely clear, as the governor's veto cannot be overridden without the agreement of 40 of the 60 legislators to call a special session.As the car-sharing industry continues to evolve and grow in Alaska, the unresolved tax collection issue is likely to remain a point of contention between the state and companies like Turo. The governor's decision to veto the bill has left the situation in limbo, with Alaskans potentially facing ongoing tax liabilities and the state missing out on potential revenue.