04/01/2014 09:00 AM Senate FINANCE

SENATE BILL NO. 178                                                                                                           
                                                                                                                                
     "An Act relating to the application of the passenger                                                                       
     vehicle rental tax; and providing for an effective                                                                         
     date."                                                                                                                     
                                                                                                                                
11:08:07 AM                                                                                                                   
                                                                                                                                
Commissioner  Bishop explained  that  SB  178 would  provide                                                                    
clarification of the intent of  the rental car tax. It would                                                                    
amend statute to  make it clear that the  rental vehicle tax                                                                    
would not apply to  Alaska business making long-term rentals                                                                    
to other Alaska businesses.                                                                                                     
                                                                                                                                
11:09:52 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:10:15 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
11:10:31 AM                                                                                                                   
                                                                                                                                
Co-Chair Kelly  MOVED to ADOPT  the committee  substitute CS                                                                    
SB 178(FIN),  work draft 28-LS1406\Y  (Strasbaugh, 3/28/14).                                                                    
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
BRITTANY HUTCHISON,  STAFF, SENATOR CLICK  BISHOP, explained                                                                    
the  changes to  the CS.  Section 1,  page 1,  line 4  was a                                                                    
housekeeping  section,   which  consolidates  a   terms  for                                                                    
passenger and  recreational in order to  better organize the                                                                    
statute. Section  2, page 1,  line 10 reduces the  term from                                                                    
90 days to 28 days of  which a rental vehicle is exempt from                                                                    
the tax.  Therefore, a rental  vehicle was exempt if  it was                                                                    
28  days  or  more  and  had a  written  contract.  It  also                                                                    
exempted  an  extension of  the  contract,  as long  as  the                                                                    
extension  took place  before  the 28  day  period, with  no                                                                    
break  in  the  initial   period  and  extension.  This  was                                                                    
intended to coincide with  current rental company contracts,                                                                    
and  because most  visitors did  it for  less than  28 days.                                                                    
Section 3, page  2, line 6 consolidated  the terms passenger                                                                    
and  recreational,  and  the  statute  clearly  stated  that                                                                    
passenger vehicles  were taxed  at 10  percent of  all costs                                                                    
and fees, and recreational vehicles  were taxed at 3 percent                                                                    
of all  costs and fees. Section  4, page 2, line  13 repeals                                                                    
AS 43.52, sections 30 and  40, because the consolidations in                                                                    
Sections 1  and 3 eliminated the  requirement. The committee                                                                    
substitute  from   the  Transportation  Committee   had  two                                                                    
sections that  had since been removed:  a section decreasing                                                                    
the gross  vehicle weight and  the other dealt  with further                                                                    
defining   a  passenger   vehicle.  She   stated  that   the                                                                    
definition of  a passenger vehicle was  removed, because the                                                                    
department  stated  that  it   would  be  too  difficult  to                                                                    
implement.  Currently in  statute,  vehicles currently  over                                                                    
8500 pounds  were exempt  from the tax.  The purpose  of the                                                                    
legislation was  to clarify which  rental vehicles  would be                                                                    
covered  by the  tax. It  was intended  that only  passenger                                                                    
rental cars as described in AS 43.52 should be taxed.                                                                           
                                                                                                                                
Co-Chair  Meyer  wondered  if the  letter  of  intent  would                                                                    
follow the bill. Ms. Hutchison  replied the letter of intent                                                                    
would not be attached to the bill.                                                                                              
                                                                                                                                
JOHN   MANLY,  STAFF,   SENATOR  CLICK   BISHOP,  introduced                                                                    
himself.                                                                                                                        
                                                                                                                                
SB  178  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.