Legislature(2013 - 2014)BARNES 124

02/19/2013 01:00 PM TRANSPORTATION

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* first hearing in first committee of referral
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= bill was previously heard/scheduled
Moved Out of Committee
Moved Out of Committee
Moved Out of Committee
               HB 56-PASSENGER VEHICLE RENTAL TAX                                                                           
1:20:43 PM                                                                                                                    
CHAIR P. WILSON  announced that the next order  of business would                                                               
be HOUSE  BILL NO. 56,  "An Act excluding motorcycles  and motor-                                                               
driven  cycles  from  the  passenger   vehicle  rental  tax;  and                                                               
providing for an effective date."                                                                                               
1:20:54 PM                                                                                                                    
REPRESENTATIVE  LINDSEY HOLMES,  Alaska State  Legislature, joint                                                               
prime  sponsor of  HB  56,  stated she  introduced  this bill  to                                                               
support some local  businesses.  In 2003,  the legislature passed                                                               
a  bill to  impose  a motor  vehicle rental  tax  (MVRT) and  the                                                               
committee discussion related to rental  cars, but did not include                                                               
any discussion about recreational vehicles.   The bill passed the                                                               
legislature.   At the  time, it appears  the legislature  did not                                                               
realize that  the definition included recreational  vehicles (RV)                                                               
and later  amended the statutes to  lower the tax rate.   Several                                                               
years  ago, the  state's tax  division realized  that motorcycles                                                               
were also included in the  definition and began implementing this                                                               
tax.   However,  similar  to RVs,  motorcycles  are expensive  to                                                               
rent, the season  is limited, and motorcycles must  be stored the                                                               
remaining eight  to ten months  of the year.   The burden  of the                                                               
same  rental  rate  as  motor vehicles  makes  it  expensive  and                                                               
uneconomical for people  to rent motorcycles.   The travelers who                                                               
rent motorcycles tend to stay  in hotels, eat at restaurants, and                                                               
enhance  the  local  economy  of  communities  in  Alaska.    She                                                               
concluded  that motorcycle  rentals should  be encouraged.   This                                                               
bill would  remove the  tax on motorcycle  rentals from  the law.                                                               
She offered  her belief that  this tax was never  contemplated to                                                               
be included in the statute to affect motorcycles.                                                                               
1:23:09 PM                                                                                                                    
JAMES WALDO,  Staff, Representative Lindsey Holmes,  Alaska State                                                               
Legislature,  on behalf  of  Representative  Holmes, joint  prime                                                               
sponsor of HB 56, said that the  chief concern is the size of the                                                               
rental tax since renting a motorcycle  for five to ten days could                                                               
add several  hundred in taxes to  the rental.  He  suggested that                                                               
removing the  rental tax on  motorcycles would help  foster these                                                               
small tourism-related businesses.   Historically, the language in                                                               
this bill  has been before  the legislature  last year.   He said                                                               
the language  is the same language  as the prior bill  before the                                                               
1:24:23 PM                                                                                                                    
REPRESENTATIVE  ISAACSON  referred  to  subparagraph  (H),  which                                                               
lists motorcycle.   He asked whether the  statute referenced also                                                               
includes snowmachines.                                                                                                          
MR.  WALDO answered  that all-terrain  vehicles (ATVs)  are dealt                                                               
with in  current law.  He  did not believe ATV  rentals are taxed                                                               
as motor vehicles.                                                                                                              
REPRESENTATIVE  ISAACSON asked  how  extensive that  is when  all                                                               
other  vehicles seem  to be  covered  and whether  the source  of                                                               
revenue from  ATVs should  be considered  in order  for it  to be                                                               
MR.  WALDO said  he was  not certain  about numbers  of ATVs  and                                                               
offered to supply the information.   This wasn't an area that was                                                               
REPRESENTATIVE ISAACSON said he  wasn't suggesting covering ATVs,                                                               
but he did not wish to  penalize one industry and the sponsor was                                                               
seeking equity.                                                                                                                 
1:26:13 PM                                                                                                                    
REPRESENTATIVE GATTIS  said she  is an  avid snowmachine  and ATV                                                               
user.  She asked whether  this is an on-the-road vehicle program.                                                               
She suggested that vehicles that  use roads would be assessed the                                                               
MVRT, whereas snowmachines and ATVs  are not on-the-road vehicles                                                               
and  would not  be subject  to  the tax.   In  response to  Chair                                                               
Wilson, she  responded that she  owns her off-road  vehicles, but                                                               
she knows  some people also  rent snowmachines; however,  they do                                                               
not  ride snowmachines  on the  road.   She recalled  she pays  a                                                               
snowmachine tax and obtains a sticker for use in state parks.                                                                   
CHAIR P.  WILSON recalled  that road  use by  snowmachines varies                                                               
since in certain areas in her community snowmachines use roads.                                                                 
REPRESENTATIVE GATTIS remarked that  snowmachines and ATVs do not                                                               
legally use the roads in her area.                                                                                              
REPRESENTATIVE ISAACSON reported he  attended a safety conference                                                               
at DOT&PF  and some communities have  been authorized exceptions,                                                               
especially in rural areas.                                                                                                      
1:28:08 PM                                                                                                                    
MR.  WALDO  drew attention  to  a  handout in  members'  packets,                                                               
[entitled,  "Chapter  43.52.   TRANSPORTATION  TAXES."]  He  then                                                               
referred to  "AS 43.52.099, Definitions."   The  definition under                                                               
AS 43.52.099  (2) for  "passenger vehicle"  which read,  "means a                                                               
motor vehicle as defined in AS  28.90.990 that is driven or moved                                                               
on a highway or other public  right-of-way in the state, but does                                                               
not include ...."  He said this  lists what is not included so he                                                               
agreed  the  statute refers  to  vehicles  licensed to  drive  on                                                               
highways and does not include ATVs or snowmachines.                                                                             
1:29:21 PM                                                                                                                    
JOHANNA BALES,  Deputy Director, Tax Division,  Anchorage Office,                                                               
Department of Revenue  (DOR), stated the purpose of  the MVRT was                                                               
to collect tax on vehicles that  were driven and licensed for use                                                               
on  public  highways.   It  does  not encompass  snowmachines  or                                                               
recreational vehicles  (RVs), but  after some detailed  review of                                                               
the  law  - also  reviewed  by  the  Department  of Law  (DOL)  -                                                               
motorcycles are  currently included and  are taxed.   In response                                                               
to  Chair Wilson  she agreed  this bill  would remove  motorcycle                                                               
from the definition of a passenger vehicle.                                                                                     
1:30:23 PM                                                                                                                    
NANCY HULL,  Owner, Alaska Motorcycle  Adventure (AMV),  said her                                                               
business has rented motorcycles since 1994  or for 20 years.  She                                                               
offered her support for HB 56  to exclude motorcycles from the 10                                                               
percent MVRT.   Rental companies and  Alaska's tourism businesses                                                               
have  been impacted  by the  unintended consequence  of the  tax.                                                               
She explained that her customers  must choose to rent motorcycles                                                               
for  fewer days  or they  completely  pass on  coming to  Alaska,                                                               
which  hurts  Alaska's  tourism.    She  related  the  motorcycle                                                               
tourism is  a limited season with  less than 90 days  and rentals                                                               
average $200  per day  per motorcycle.   For example,  a customer                                                               
who rents 10 days  would pay $20 per day or a  total tax of $200.                                                               
She has  found people back away  from rentals due to  the onerous                                                               
tax.   Typically, a  couple or  a father and  son would  rent two                                                               
motorcycles  and pay  $400 in  taxes; however,  since no  tax cap                                                               
exists, the rental taxes continue to accrue at $20 per day.                                                                     
MS.  HULL  reported that  her  customers  ride and  drive,  which                                                               
enables  them  to go  to  remote  parts  of  the state.    People                                                               
regularly go  to Wiseman,  Circle, Deadhorse,  Chicken, McCarthy,                                                               
Valdez,  and  Deadhorse  so  remote  businesses  in  these  areas                                                               
benefit  from  meals,  hotels, and  other  tourism  expenditures.                                                               
Additionally,  these motorcycle  riders  pass  through the  urban                                                               
areas,  such  as  Anchorage, the  Matanuska-Susitna  valley,  and                                                               
Fairbanks, spending  time and  money in those  areas.   She asked                                                               
the committee  to help her  business grow  by passing HB  56 this                                                               
session.  In  2003, when the tax was  initiated, motorcycles were                                                               
omitted from  the discussion.   She  described the  process these                                                               
four tiny motorcycle  businesses have taken to fix  this as being                                                               
a  long and  time-consuming  process.   She  concluded by  asking                                                               
members  for   their  support  and  to   consider  sponsoring  or                                                               
cosponsoring HB 56.                                                                                                             
1:34:23 PM                                                                                                                    
CHAIR P. WILSON asked for the  number of motorcycles she had when                                                               
she started her business.                                                                                                       
MS. HULL  said she started  with two motorcycles and  this season                                                               
she will likely rent 30 motorcycles                                                                                             
CHAIR P. WILSON remarked it adds up.                                                                                            
MS. HULL  said the company is  seasonal.  Last year  she computed                                                               
the MVRT based  on the complete tax.  She  recalled the total tax                                                               
collected  was $8.5  million, but  the  total MVRT  for the  four                                                               
motorcycle  companies amounted  to  $15,000 to  $20,000, or  less                                                               
than one tenth of one percent of the total tax.                                                                                 
CHAIR P.  WILSON, after first  determining no one else  wished to                                                               
testify, closed public testimony on HB 56.                                                                                      
1:36:01 PM                                                                                                                    
REPRESENTATIVE ISAACSON  moved to report  HB 56 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
note.   There being  no objection,  HB 56  was reported  from the                                                               
House Transportation Standing Committee.                                                                                        
The committee took an at-ease from 1:36 p.m. to 1:39 p.m.                                                                       

Document Name Date/Time Subjects
HB 46 28-LS0263A.pdf HTRA 2/19/2013 1:00:00 PM
HB 46
HB 46-Fiscal Note DOA-DMV-2-08-13.pdf HTRA 2/19/2013 1:00:00 PM
HB 46
HB 46 Sponsor Statement.pdf HTRA 2/19/2013 1:00:00 PM
HB 46
HB 46 - Supporting Docs -Testimony from Aves Thompson House STA HB46 CDL Vets 2-12-13.pdf HTRA 2/19/2013 1:00:00 PM
HB 46
HB 46 Supporting Docs - Letter Mark San Souci DOD State Liaison Office 2-6-13.pdf HTRA 2/19/2013 1:00:00 PM
HB 46
HB 46 Supporting Docs- Article Air Force News Service - DOD 01152013.pdf HTRA 2/19/2013 1:00:00 PM
HB 46
HB 46 Supporting Docs-Letter HAP Alaska-Yukon Princess Cruise Bruce Bustamente 2-11-13.pdf HTRA 2/19/2013 1:00:00 PM
HB 46
HB 56 Ver A.pdf HTRA 2/19/2013 1:00:00 PM
HB 56
2013 HB 56 Sponsor Statement.pdf HTRA 2/19/2013 1:00:00 PM
HB 56
HB056-DOR-TAX-02-16-13.pdf HTRA 2/19/2013 1:00:00 PM
HB 56
HB 56 Backup - Statute AS 43 52 010 Vehicle Rental Taxes.pdf HTRA 2/19/2013 1:00:00 PM
HB 56
HB0094A.pdf HTRA 2/19/2013 1:00:00 PM
HB 94
HB 94 Sponsor Statement.pdf HTRA 2/19/2013 1:00:00 PM
HB 94
HB094-DOT-NRHA-2-14-13.pdf HTRA 2/19/2013 1:00:00 PM
HB 94