Legislature(2005 - 2006)BUTROVICH 205
04/19/2005 01:45 PM Senate TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| SB174 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 174 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
April 19, 2005
1:48 p.m.
MEMBERS PRESENT
Senator Charlie Huggins, Chair
Senator John Cowdery, Vice Chair
Senator Gene Therriault
Senator Albert Kookesh
Senator Hollis French
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 174
"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."
MOVED SB 174 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 174
SHORT TITLE: EXEMPT UHAULS FROM VEHICLE RENTAL TAX
SPONSOR(s): SENATOR(s) HUGGINS
04/14/05 (S) READ THE FIRST TIME - REFERRALS
04/14/05 (S) TRA, FIN
04/19/05 (S) TRA AT 1:45 PM BUTROVICH 205
WITNESS REGISTER
Deborah Grundmann, Legislative Aide
Staff to Chair Huggins
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced SB 174.
John Norris, President
U-Haul of Alaska
4631 Shelburne Place
Anchorage, Alaska 99516-2930
POSITION STATEMENT: Testified in support of SB 174.
Joanna Bales, Program Manager
Vehicle Rental Tax
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Neutral on SB 174.
ACTION NARRATIVE
CHAIR CHARLIE HUGGINS called the Senate Transportation Standing
Committee meeting to order at 1:48:39 PM. Present were Senators
John Cowdery, Gene Therriault, Hollis French, Albert Kookesh,
and Chair Charlie Huggins.
SB 174-EXEMPT UHAULS FROM VEHICLE RENTAL TAX
CHAIR HUGGINS announced SB 174 to be up for consideration.
DEBORAH GRUNDMANN, staff to Senator Huggins, said:
Before you today is SB 174, an act excluding certain
trucks from the definition of 'passenger vehicle' for
purposes of the Passenger Vehicle Rental Tax and
providing for an affective date. Senate Bill 174 was
introduced to correct an unintended consequence of
legislation passed in 2003.
In 2003 the Alaska Legislature passed HB 271 as a
tourism based tax on passenger rental cars and
recreational vehicles. The purpose of the tax was to
tax visitors using our road system, not local
citizens. However, HB 271 has negatively impacted the
following: Alaska citizens needing to move, our local
independent outlets and the consumer truck rental
business overall. Senate Bill 174 will ensure that the
tax applies more specifically to the intended target
of visitors renting passenger vehicles and recreation
vehicles.
Currently the Department of Revenue anticipates that
$7.4 million will be collected from this tax, if U-
Hauls are excluded, there will be a deficit of
$275,000 dollars. So this exclusion will have a
minimal impact on the taxes that are being collected.
1:50:50 PM
JOHN NORRIS, President of U-Haul Alaska, said:
The passage of HB 271 has affected Alaskan citizens
that have needed to move, our local independent
outlets and our business overall. Today, 17 percent
fewer people are using our services and in the month
of March alone there was a 29 percent drop in
customers using our services.
Moving is a stressful time for people and the
additional tax is often applied to customers who can
least afford it, adding even more stress to their
moving experience. After HB 271 became law, HB 347 was
introduced during the 2004 legislative session to
correct the unintended inclusion of taxicabs. HB 347
provided an exemption for taxicabs and was passed and
signed into law. SB 174 would provide the same relief
for trucks that HB 347 provided to taxicabs.
1:52:40 PM
Ninety-Five percent of our customers who use our
services are Alaska residents. The Alaska Trucking
Association favors this legislation along with the
truck renting and leasing association. As far as I am
aware there are no investor groups that oppose this
legislation.
Since starting the business in 1992, we have seen an
increase in utilization at the rate of about 7 to 14
percent each year. The 17 percent decrease in the
utilization of our services was the first decline that
we have ever seen. While I cannot attribute this
solely to any one item, the communication from our
customers is that the 10 percent tax has been a
significant hardship for them.
This tax is having a significant impact on how
Alaskans move yet it is only a small amount compared
to the estimated $7 million that will be collected
from the intended target of SB 271. Additionally,
truck rental is done by business that must meet their
peak procedural demands and higher transportation
costs will almost certainly result in higher consumer
product costs. In either case, Alaskan residents are
bearing the burden of the additional 10 percent tax. I
support SB 174.
SENATOR COWDERY asked the lowest daily rental that he offers.
SENATOR KOOKESH arrived at 1:55:41 PM.
MR. NORRIS responded:
The smallest vehicle that we rent is about $19.95 and
the average mileage rental that we have is about $55.
SENATOR COWDERY asked if that sum includes tax.
MR. NORRIS responded no.
SENATOR COWDERY asked Mr. Norris whether he would change his
rental rates if the bill were to pass.
MR. NORRIS said his rates would remain at their current level.
SENATOR FRENCH asked whether trailers are subject to the tax.
MR. NORRIS responded trailers are not subject to the tax.
SENATOR FRENCH asked the witness if his smallest truck is over
8,500 pounds.
MR. NORRIS responded yes.
SENATOR FRENCH asked if that is the case with his competitor's
vehicles.
MR. NORRIS replied all of his competitors are in the same weight
category as his.
1:57:38 PM
CHAIR HUGGINS asked the witness the number of outlets his
company has in Alaska.
MR NORRIS replied his company has 49 independent rental agencies
and three company-owned rental agencies.
CHAIR HUGGINS asked Mr. Norris whether he talked with any of his
competitors about the bill and if so, whether any of them
objected to the bill.
MR. NORRIS responded he had not spoken to any of his competitors
about the bill.
CHAIR HUGGINS asked Mr. Norris if he believes that any of his
competitors have any reason to oppose this bill.
MR. NORRIS said he does not believe any of his competitors have
reason to oppose SB 174.
CHAIR HUGGINS asked whether he was surprised at the effect that
HB 271 had on his business.
MR. NORRIS replied the affect that HB 271 has had on his
business came as a total surprise.
CHAIR HUGGINS asked how he was told that he was supposed to
collect the tax.
MR. NORRIS answered that the Department of Revenue contacted his
accounting firm.
1:59:31 PM
SENATOR THERRIAULT asked if standard pickup trucks are taxed.
MR. NORRIS said that standard pickup trucks would still be taxed
if this bill were to pass since they weight less than 8,500
pounds, which is the exception limit.
2:01:02 PM
MS. JOHANNA BALES, program manager, Vehicle Rental Tax,
Department of Revenue, responded language of the bill is such
that two standards must be met before a rental truck is exempt
from taxation. One is the weight requirement of 8,500 pounds and
the other is the vehicle must be designed, used or maintained
primarily for the transportation of personal property.
2:02:40 PM
CHAIR HUGGINS asked; 'When HB 271 was put into affect in 2003,
did you realize that moving vehicles would be included, or was
that a surprise to you as well?'
MS. BALES responded:
It didn't come as much of as surprise. I think that we
were more surprised by the taxicab rentals. I do need
to point out that the municipality of Anchorage has
its own vehicle rental tax that is separate from the
state and they specifically exclude the U-Haul type
rental vehicles from their rental tax as well.
SENATOR THERRIAULT moved SB 174 from committee with attached
fiscal notes and attached recommendations. There being no
objections, the motion carried.
There being no further business to come before the committee,
Chair Huggins adjourned the meeting at 2:04:26 PM.
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