North Carolina Lawmakers Hear Pros, Cons of Uber, Lyft, Airbnb

November 20, 2014 by Jonathan Drew

North Carolina lawmakers heard arguments this week for and against increasing regulation of digital services that allow people to sell car rides through a smartphone app or rent out rooms to travelers.

Car services such as Uber and Lyft and short-term rental sites including Airbnb represent a new business model that legislators are studying ahead of the session that begins in January. There’s currently no proposed legislation on the businesses.

Representatives of the traditional lodging and taxi industries told the Revenue Laws Study Committee that the new businesses can undercut their prices because they have lower overhead and lighter regulation. Individual entrepreneurs can use the new services to sell rides or rent rooms with little or no prior experience.

Lyft and Uber compete with taxis by linking customers using a smartphone app with drivers selling rides out of vehicles that are typically noncommercial sedans or SUVs. Both services make drivers undergo criminal background checks, and drivers are rated by customers on each ride. Uber and Lyft say they also provide commercial auto insurance that kicks in when rides are ordered.

Each driver is treated as an independent contractor who pays income taxes on money earned behind the wheel, said Greg Roney, a researcher for the General Assembly. Transactions are done by credit card and tracked by the companies, which supply the drivers with tax forms.

Rachel Holt, Uber’s Regional General Manager for the East Coast, argued that the company’s background checks are more rigorous than what many cities require of taxi drivers. She said that studies indicate that Uber helps reduce DUIs and brings rides to areas previously underserved by taxis. Uber works with licensed limo drivers in some markets.

Michael Solomon, president of the Taxi Taxi cab service in the Raleigh area, said drivers for Uber, Lyft and similar services should be required to obtain commercial license plates and pay for commercial insurance that covers them around the clock.

“There’s clearly a double standard,” he said.

The meeting also included presentations on sites such as Airbnb, which allow people to rent their houses, apartments or spare rooms to travelers on a short-term basis as an alternative to a hotel.

Under current law, the hosts are supposed to collect tax on the stays and pay the state, which can make it hard to track.

Lynn Minges, President and CEO of the North Carolina NC Restaurant & Lodging Association, said oversight and vetting should be increased for the short-term rental hosts.

“They should be required to play on a level playing field,” she said.

Cathryn Parsons of Raleigh said she drives a few hours per week for Lyft and also hosts travelers through Airbnb to supplement her family’s income. She urged the lawmakers not to over-complicate the system.

“If you over-legislate this … I just won’t do it,” she said.

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