Legislature(2003 - 2004)
01/21/2004 02:26 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 347
An Act exempting taxicabs from the passenger vehicle
rental tax; and providing for an effective date.
SUE STANCLIFF, STAFF, REPRESENTATIVE PETE KOTT, testified
that HB 347 was introduced specifically to exclude a taxicab
from the definition of "passenger vehicle" in statute,
exempting taxicab rentals from the Vehicle Rental Tax.
Ms. Stancliff noted that last year, HB 271 was passed with
the intent to levy excise taxes on the rental of passenger
and recreational vehicles usable on highways and vehicular
ways. That imposed a substantial and confusing burden on
owner-leasers of taxicabs who would be required to collect
from the taxicab drivers. That was a technical and
unintended application of the Vehicle Rental Tax to
commercial taxicab lease transactions.
Co-Chair Harris asked if the taxicabs were mostly privately
owned and then leased to a company. Ms. Stancliff explained
that the taxicab vehicles are owned by operators, of which,
each purchases and maintains the taxicab, secures all the
insurance coverage including the liability insurance to the
drivers, and also arranges to obtain the rights to operate
under one of the taxicab permits currently held in the
municipality. She noted that there are testifiers on line
to address technical questions.
JAMES BRENNAN, (TESTIFIED VIA TELECONFERENCE), ATTORNEY,
HEDLAND BRENNAN, HEIDEMAN AND COOKE, ANCHORAGE, responded to
the query made by Co-Chair Harris. In Anchorage, the
taxicab owners rent or lease the cabs to the so-called
"chauffeurs" or drivers, who are independent business
people. The drivers' operate as their own independent
businessperson. They are not employees of either the owners
or the cab.
The impact of the Vehicle Rental Tax imposed on taxicab
drivers would be over and above requirement of paying a tax
on the amount that they rent the cab for, ordinarily around
$90 dollars per day shift. They make their living based on
making a profit after paying rental and other expenses. He
emphasized it is a close margin to operate on and that the
tax would be felt exclusively by the taxi cab drivers. They
would not be able to pass that tax on to the passengers
after the change is made to the regulation.
Mr. Brennan understood that the tax was not intended to
affect the local economy. He emphasized that the tax would
fall exclusively on the Anchorage taxicab drivers, having a
huge and unintended effect.
Representative Croft asked if any of those clients had
assessed it or if this would be a risk. Mr. Brennan
responded that some of the operators did receive a notice
because they operate under a business name. Some of these
people came to the law office because of the impending tax.
It was apparent that the tax created an unintended
situation. Most people do not have a good understanding of
how the industry is structured. Big cab companies do not
own the taxicabs but rather they tend to be leased out to
cab drivers. He reiterated that it was not an intended
impact.
Co-Chair Harris asked about the definition of a taxicab and
if it would include chauffeurs. Mr. Brennan advised that
under an Anchorage ordinance, there is a distinction between
a taxicab, a limousine and the catchall group called
"vehicles for hire". Taxicabs are a specific group of "on
demand" vehicles to move a person from a specific point to
another specific point. He did not believe that there are
other groups left out. In the limousine industry, the
structure is different and there are companies that own
their own limousines and hire their drivers as employees.
They would not be under this tax as there is no rental fee
unless the transaction between the customer and limousine is
a rental. The tax is only on the rental of a vehicle. He
reiterated that as the law is currently written, it would
not apply to them. The reason that it applies to a taxicab
is because there is a lease agreement.
Co-Chair Harris questioned if any limousine companies were
being charged the tax. Ms. Stancliff responded that the
only thing that "governs" that group are the licensing and
smoking regulations.
JANIS HALES, (TESTIFIED VIA TELECONFERENCE), REVENUE AUDIT,
TAX DIVISION, DEPARTMENT OF REVENUE, ANCHORAGE, offered to
answer any technical questions the Committee might have.
JOHN LYNCH, (TESTIFIED VIA TELECONFERENCE), PRESIDENT, TRUCK
RENTING & LEASING ASSOCIATION, ALEXANDRIA, VIRGINIA,
recommended that HB 347 be amended to exclude all trucks
that transport property over 10,000-pounds. The rental tax
is directed toward rental cars and not trucks that transport
property. The tax is intended for out of state tourists and
not in State residents. Under the definition of "passenger
vehicle" contained in the Alaska Code, it would apply to all
vehicles under 26,000-pounds including rental trucks.
It is a significant tax on Alaska residents and businesses
as trucks less than 26,000-pounds are generally rented to
small businesses and local residents for household moves.
Mr. Lynch urged that the Committee amend that language to
remove trucks over 10,000-pounds. He offered to work with
the Committee on structuring that language.
Co-Chair Harris inquired if the tax would apply to firms
that rent equipment. Mr. Lynch responded that it would not
and that the Department of Revenue has indicated it would
apply to all vehicles under 26,000-pounds including that
type of truck.
MICHAEL BELL, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
ALASKA TRUCKING ASSOCIATION, ANCHORAGE, spoke to HB 347. He
noted that the definition of a commercial motor vehicle
contained in HB 241, indicates that in Alaskan statutes, a
motor vehicle is around 26,000 pounds. He asked that the
Committee consider adopting the definition of a commercial
motor vehicle listed in Alaska Statute (AS) 19.10.399, which
includes vehicles in the 26,000-pound range used for
commerce.
CHRIS FISCHER, (TESTIFIED VIA TELECONFERENCE), KACHECAB/CAB
DRIVERS, HOMER, commented on how difficult the tax will be
for the taxicab drivers in Homer, Alaska. He believed that
the tax would cause the little cab companies to go out of
business. He urged passage of the bill with corrected and
amended language.
Representative Croft referenced Page 1, Lines 5-6, and asked
if the definition of "passenger vehicle" be changed to
"motor vehicle" as defined in AS 28.40.100 and then change
the language to what is contained in AS 19.10.399 (1), the
definition of commercial motor vehicles that uses a 10,000-
pounds rather than 26,000-pounds.
Mr. Lynch responded that it could solve the commercial
trucking aspect, however, a consumer rental truck called a
"u-haul" would continue to be included.
Representative Croft asked how to solve the u-haul issue.
Mr. Lynch offered to provide that language which could
address the 10,000-pound weight threshold transporting
property. Representative Croft offered to work with Mr.
Lynch to determine language that would adequately address
these concerns.
Co-Chair Williams noted that the bill would be HELD in
Committee in order to work out the language.
HB 347 was HELD in Committee for further consideration.
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