How Will North Carolina Tax And Regulate Airbnb And Uber?

Nov 19, 2014

Credit North Carolina General Assembly

North Carolina lawmakers are taking their first look at how to regulate networks of individuals who buy and sell services between each other, a billion-dollar global industry that already operates in dozens of cities across the state.

One of the peer-to-peer economy’s biggest exponents, Airbnb, accounts for about 2,700 residential rental listings across North Carolina, and drivers who pick up passengers with their personal cars using the application Uber operate in ten cities here.

At a hearing on Tuesday, a legislative panel began discussing how the state could tax and regulate such businesses, issues that other states have been grappling with for years.  

“I think we’re hearing a lot of new terms and a lot of new proposals,” Rep. Julia Howard (R-Davie) said Tuesday. “I would anticipate that a member might eventually want to file a bill, at which time it will go through all 12 committees and get scrubbed real good.”

At the joint Revenue Laws Study Committee, new web-based service providers and companies with traditional service models told lawmakers about respective challenges they face.

Credit Adam Fagen / Flickr/Creative Commons

Michael Solomon, president of the Ft. Lauderdale-based TaxiTaxi, which operates in North Carolina, complained that web-based services such as Uber and Lyft can under-cut his business because they face lower regulatory costs and more lax safety requirements. In one instance in San Francisco, an Uber driver struck and killed a six-year-old girl.

But Rachel Holt, Uber’s manager for the East coast, listed to lawmakers benefits the company represents to communities. She cited a study commissioned by the company showing a drop in DUI rates when the company began offering services in cities.

"When Uber entered, you can see a direct reduction in DUI rates, particularly around the times that Duis spike and that Uber business also spikes,” Holt told lawmakers.

Rep. Andy Wells (R-Catawba) asked at the hearing how lawmakers could level regulations and taxes for emerging and existing businesses.

'There should be some way of tracking them down so we can be sure that, yes, we believe in entrepreneurship, but there's also a requirement that they do pay their state and federal taxes.' - Sen Bob Rucho (R-Mecklenburg)

"Wouldn't it be possible to cut down the high tax and regulatory parts to level the field?" he asked.

Sen. Bob Rucho (R-Mecklenberg) replied that a solution should include a tax on the new businesses.

"There should be some way of tracking them down so we can be sure that, yes, we believe in entrepreneurship, but there's also a requirement that they do pay their state and federal taxes,"  Rucho said.

Sen. Floyd McKissick (D-Durham) said after the hearing that issues such as taxes could be addressed more easily than regulatory issues such as safety standards.

“Do we need to deal with a multitude of issues? Yes,” McKissick said. “It's not just about tax, it's not just about revenues, it's not simply about safety, and it's not simply about insurance.”

Any new regulations would be drafted this spring during the long legislative session.