Legislature(2003 - 2004)
05/10/2003 10:07 AM RLS
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.