04/14/2005 01:30 PM House TRANSPORTATION

HB 199-EXEMPT UHAULS FROM VEHICLE RENTAL TAX                                                                                  
                                                                                                                                
CO-CHAIR ELKINS announced that the  first order of business would                                                               
be HOUSE BILL NO. 199   "An Act excluding certain trucks from the                                                               
definition of  'passenger vehicle' for purposes  of the passenger                                                               
vehicle rental tax; and providing for an effective date."                                                                       
                                                                                                                                
MICHAEL O'HARE,  Staff to Representative Pete  Kott, Alaska State                                                               
Legislature, said in  2003 the legislature passed  House Bill 271                                                               
to  generate  revenue  from  visitors who  rent  vehicles.    One                                                               
unintended consequence was the taxation  of rental trucks used to                                                               
haul rental goods  and household goods, he added.   The bill will                                                               
exclude these trucks from the rental tax.                                                                                       
                                                                                                                                
1:37:52 PM                                                                                                                    
                                                                                                                                
JOHN  NORRIS, President,  U-Haul  Company  of Alaska,  Anchorage,                                                               
said the original  bill was intended as a tourism  tax for rental                                                               
passenger  vehicles.   He  said  he  was  surprised when  he  was                                                               
contacted by  the Department of Revenue.   He noted that  the tax                                                               
has  impacted his  company's business,  because  17 percent  less                                                               
people are using  his service.  For the month  of March, he said,                                                               
he saw a  29 percent drop in customers.   He noted that consumers                                                               
have  other means  of moving  that  are not  taxed.   A bill  was                                                               
passed in 2004 to exempt taxis,  and HB 199 will provide the same                                                               
relief for trucks, he stated.                                                                                                   
                                                                                                                                
1:41:25 PM                                                                                                                    
                                                                                                                                
MR. NORRIS  said 95 percent  of U-haul's customers  are Alaskans.                                                               
The Alaska Trucking Association and  the Truck Rental and Leasing                                                               
Association support  the legislation,  he added.   Last  year was                                                               
the first  year that his  business saw a  decrease in the  use of                                                               
rental trucks.  He said his  customers have told him that the tax                                                               
is a significant hardship.                                                                                                      
                                                                                                                                
REPRESENTATIVE NEUMAN noted  that many U-hauls work  out of small                                                               
businesses in Alaska.   He said he rents U-hauls  to deliver some                                                               
of his furniture.                                                                                                               
                                                                                                                                
1:44:20 PM                                                                                                                    
                                                                                                                                
JOHANNA BALES, Excise Audit Manager,  Tax Division, Department of                                                               
Revenue, pointed  out that HB  199 impacts five  taxpayers within                                                               
the  state, and  the estimate  in  lost revenue  is $275,000  per                                                               
year.                                                                                                                           
                                                                                                                                
CO-CHAIR ELKINS asked  what the five people are  losing in income                                                               
because of the tax.                                                                                                             
                                                                                                                                
1:46:01 PM                                                                                                                    
                                                                                                                                
MS. BALES said the department has no way to estimate that.                                                                      
                                                                                                                                
1:46:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KOHRING  moved to report  HB 199 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
There  being   no  objection,  HB   199  moved  from   the  House                                                               
Transportation Standing Committee.                                                                                              
                                                                                                                                
1:47:15 PM