Legislature(2003 - 2004)

05/10/2003 10:07 AM RLS

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 271-PASSENGER/RECREATIONAL VEHICLE RENTAL TAX                                                                              
                                                                                                                                
CHAIR ROKEBERG announced  that the final order  of business would                                                               
be HOUSE  BILL NO.  271, "An  Act levying  and providing  for the                                                               
collection  and  administration of  an  excise  tax on  passenger                                                               
vehicle rentals; and providing for an effective date."                                                                          
                                                                                                                                
Number 223                                                                                                                      
                                                                                                                                
KRIS  KNAUSS, Staff  to Representative  Pete  Kott, Alaska  State                                                               
Legislature, explained  that HB 271  implements a 10  percent tax                                                               
on  passenger  vehicle rentals  and  a  3  percent sales  tax  on                                                               
recreational  vehicles  (RVs).     The  legislation  exempts  any                                                               
government  employees  who  are   on  local,  state,  or  federal                                                               
business.   He noted that  the committee packet should  include a                                                               
state-by-state comparison of the rental car tax.                                                                                
                                                                                                                                
Number 212                                                                                                                      
                                                                                                                                
CHAIR ROKEBERG moved that the  committee adopt Amendment 1, which                                                               
reads as follows:                                                                                                               
                                                                                                                                
     Page 1, line 11:                                                                                                           
          Delete "The"                                                                                                          
          Insert "Except in a municipality that imposes a                                                                       
     specific  vehicle  rental   tax  on  passenger  vehicle                                                                    
     rentals under AS 29.45, the"                                                                                               
                                                                                                                                
     Page 1, line 13, following "passenger vehicle.":                                                                           
          Insert "In a municipality that imposed a specific                                                                     
     vehicle rental  tax on passenger vehicle  rentals under                                                                    
     AS 29.45 in effect on January 1,  2003, the rate of the                                                                    
     state  passenger   vehicle  rental  tax   levied  under                                                                    
     AS 43.52.020  is  10 percent  less  the  amount of  the                                                                    
     municipal tax.   If the  municipal tax is  greater than                                                                    
     10 percent, then the rate of the state tax is zero."                                                                       
                                                                                                                                
     Page 2, line 4:                                                                                                            
          Delete "The"                                                                                                          
          Insert "Except in a municipality that imposes a                                                                       
     specific  vehicle rental  tax  on recreational  vehicle                                                                    
     rentals under AS 29.45, the"                                                                                               
                                                                                                                                
     Page 2, line 6, following "recreational vehicle.":                                                                         
          Insert "In a municipality that imposed a specific                                                                     
     vehicle  rental  tax  on recreational  vehicle  rentals                                                                    
     under AS 29.45  in effect on January 1,  2003, the rate                                                                    
     of  the state  recreational vehicle  rental tax  levied                                                                    
     under AS 43.52.030 is three percent  less the amount of                                                                    
      the municipal tax.  If the municipal tax is greater                                                                       
     than three percent, then the rate of the state tax is                                                                      
     zero."                                                                                                                     
                                                                                                                                
     Page 2, lines 17 - 19:                                                                                                     
          Delete all material.                                                                                                  
                                                                                                                                
     Page 2, line 20:                                                                                                           
          Delete "Sec. 43.52.080"                                                                                             
          Insert "Sec. 43.52.070"                                                                                             
                                                                                                                                
     Page 2, line 27:                                                                                                           
          Delete "Sec. 43.52.090"                                                                                             
     Insert "Sec. 43.52.080"                                                                                                  
                                                                                                                                
REPRESENTATIVE COGHILL objected.                                                                                                
                                                                                                                                
CHAIR ROKEBERG  explained that  Amendment 1 places  a cap  on the                                                               
total amount of  any sales type taxes or  specific rental vehicle                                                               
tax at 10 percent on the  passenger vehicles and 3 percent on the                                                               
recreational  vehicles.     He  mentioned  former  Representative                                                               
Andrew  Halcro's  letter,  which  is included  in  the  committee                                                               
packet.    Chair  Rokeberg  informed   the  committee  that  this                                                               
amendment  was   discussed  in   the  House   Finance  Committee.                                                               
However,  at that  time it  didn't include  the January  1, 2003,                                                               
effective date to disallow any new  municipal taxes.  There was a                                                               
belief that all of the  municipalities would have a retrospective                                                               
date.                                                                                                                           
                                                                                                                                
REPRESENTATIVE KOTT acknowledged that  this amendment was offered                                                               
and  rejected in  the House  Finance  Committee.   Representative                                                               
Kott highlighted that the intent of  HB 271 is to provide revenue                                                               
to   the  state.     However,   [Amendment  1   would]  encourage                                                               
municipalities   to  increase   their  tax   base  so   that  the                                                               
municipality  would receive  the maximum  amount while  the state                                                               
would  receive  zero  revenue.   Therefore,  Representative  Kott                                                               
opposed Amendment 1.                                                                                                            
                                                                                                                                
CHAIR ROKEBERG  clarified that [under  Amendment 1]  unless there                                                               
is a tax in effect on  January 1, 2003, the municipality wouldn't                                                               
be  able  to  [increase  its  tax base].    Chair  Rokeberg  said                                                               
[Amendment 1]  is similar  to the  shock absorber  transition tax                                                               
that  has been  discussed [in  relation to]  the statewide  sales                                                               
tax.                                                                                                                            
                                                                                                                                
Number 147                                                                                                                      
                                                                                                                                
REPRESENTATIVE McGUIRE noted  her support of the  amendment.  She                                                               
highlighted  the  importance of  recognizing  that  tourism is  a                                                               
valuable industry to  the state.  She related her  belief that HB
271 is fair, but the amendment makes it better legislation.                                                                     
                                                                                                                                
CHAIR ROKEBERG  announced that there  was objection  to Amendment                                                               
1.                                                                                                                              
                                                                                                                                
A roll call vote was  taken.  Representatives Berkowitz, McGuire,                                                               
and  Rokeberg voted  in favor  of Amendment  1.   Representatives                                                               
Morgan,  Kott,   and  Coghill  voted  against   it.    Therefore,                                                               
Amendment 1 failed by a vote of 3-3.                                                                                            
                                                                                                                                
REPRESENTATIVE  BERKOWITZ   inquired  as   to  why  there   is  a                                                               
differential tax rate between [the passenger vehicles and RVs].                                                                 
                                                                                                                                
REPRESENTATIVE KOTT answered that there  was an overall goal that                                                               
would  create parity  between  passenger vehicles  and  RVs.   He                                                               
informed  the committee  that the  average  passenger vehicle  in                                                               
Anchorage rents  for $49.95 and  thus the 10 percent  [tax] would                                                               
generate $5.   The  average RV  rents for  $175 in  Anchorage and                                                               
[the tax] would generate approximately  $5.  He explained that he                                                               
didn't want  to establish a  10 percent  tax on a  "vehicle" that                                                               
would  rent for  $175, which  could potentially  push [the  total                                                               
rental  charge] over  $200 because  some  studies have  indicated                                                               
that there  is a [rental  charge] at  which people choose  not to                                                               
[rent].                                                                                                                         
                                                                                                                                
REPRESENTATIVE BERKOWITZ surmised then  that there are elasticity                                                               
studies regarding an increase of 10 percent on RVs.                                                                             
                                                                                                                                
REPRESENTATIVE KOTT  clarified that  its not a  percentage rather                                                               
there seems  to be  a reduced  level of  rentals when  the rental                                                               
charges reach $200.                                                                                                             
                                                                                                                                
REPRESENTATIVE BERKOWITZ inquired as to who rents the RVs.                                                                      
                                                                                                                                
REPRESENTATIVE KOTT estimated that  tourists would primarily rent                                                               
RVs, although he was sure that Alaskans do as well.                                                                             
                                                                                                                                
CHAIR ROKEBERG, upon determining  there was no further discussion                                                               
on the legislation, inquired as to the will of the committee.                                                                   
                                                                                                                                
Number 094                                                                                                                      
                                                                                                                                
REPRESENTATIVE  KOTT  moved  to   report  CSHB  271(FIN)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
REPRESENTATIVE BERKOWITZ objected.                                                                                              
                                                                                                                                
A roll  call vote was  taken.  Representatives  Coghill, McGuire,                                                               
Morgan, and  Kott voted in  favor of reporting CSHB  271(FIN) out                                                               
of  committee.    Representatives Berkowitz  and  Rokeberg  voted                                                               
against it.   Therefore,  CSHB 271(FIN) was  reported out  of the                                                               
House Rules Standing Committee by a vote of 4-2.                                                                                

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