Senate committee advances bill to make vehicle rental tax uniform at 9%

The Senate Transportation Committee on April 10 advanced a committee substitute for Senate Bill 138, which sets a uniform statewide vehicle rental tax of 9% for both traditional rental agencies and peer-to-peer platforms and moves the measure from committee with individual recommendations and an attached fiscal note.

The substitute bill, presented by staff to the bill sponsor, changes the previously proposed split-rate structure. "The committee substitute before you ... makes 1 change. ... the statewide vehicle rental tax is lowered from 10% to 9% ... the previous version had a 10% tax for traditional rentals and lowered the rate to 8% for peer to peer platforms," Carly Dennis told the committee. The substitute establishes a single flat 9% tax for all operators, she said.

Supporters told the committee the change levels the playing field and preserves revenue streams that fund state parks. "There is no discernible difference between the rental car service provided to customers versus any of rentals of large national rental agency and it should be taxed the way same way for all operators," said Nicole Stewart of Fairbanks, who identified herself during invited testimony as a small operator. Haley Johnson, executive director of Alaska Trails, said state parks rely on the rental-tax revenue for operations and deferred maintenance: "In fiscal year '24, I think state parks, over 40% of its budget came from the vehicle rental tax." A caller from Anchorage, Tim Levitz, said the tax would help address the parks' deferred maintenance needs, which he said exceed $90 million.

Committee members asked how the vehicle rental tax revenue is treated in state accounting. Committee counsel explained the statute (AS 43.52.00(b)) deposits the money into a special vehicle rental tax account in the general fund, meaning the revenue is not a separately held, designated fund but is identified in the general fund account structure.

After invited and public testimony, Senator Tobin moved the committee substitute. With no objection, the committee adopted the substitute and passed it from committee "with individual recommendations and attached fiscal note," the chair announced.

The bill now heads to further steps in the legislative process per the committee's recommendations. The committee did not record a roll-call vote in the hearing; action passed on unanimous voice consent and by the chair's announcement.

Supporters said the change prevents retroactive collection for small operators and creates an administrable, uniform rule for both traditional rental companies and peer-to-peer platforms. No amendments were adopted during the hearing, and no formal floor or committee vote tally was recorded on the record during the meeting.

The committee recessed briefly to sign paperwork before taking up its next item.