Legislature(2013 - 2014)BARNES 124
02/19/2013 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| HB46 | |
| HB56 | |
| HB94 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 56 | TELECONFERENCED | |
| *+ | HB 94 | TELECONFERENCED | |
| + | HB 46 | TELECONFERENCED | |
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
legislature.
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
equitable.
MR. WALDO said he was not certain about numbers of ATVs and
offered to supply the information. This wasn't an area that was
researched.
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.