Legislature(2003 - 2004)

04/24/2003 07:10 AM W&M

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 271-PASSENGER VEHICLE RENTAL TAX                                                                                           
Number 0125                                                                                                                     
CO-CHAIR  WHITAKER announced  that  the first  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 0152                                                                                                                     
CO-CHAIR HAWKER moved to adopt  the proposed committee substitute                                                               
for HB 271,  Version 23-LS0936\S, Kurtz, 4/23/03,  as the working                                                               
document.   There being  no objection, Version  S was  before the                                                               
CO-CHAIR HAWKER explained that  the proposed committee substitute                                                               
was drafted in  response to public testimony  by industry members                                                               
during yesterday's  hearing.   The proposed  committee substitute                                                               
has been constructed  with the cooperation of the  members of the                                                               
committee  and the  bill's sponsor  [Representative Kott].   This                                                               
version expands the definition of  vehicles subject to the excise                                                               
tax  to  include  recreational  vehicles  as  well  as  passenger                                                               
vehicles.  The rate on passenger  vehicles has been reduced to 10                                                               
percent from the  previous bill's 15 percent  level because local                                                               
taxes  and access  fees  created  too much  of  a  burden on  the                                                               
industry.   The  10 percent  [excise tax]  is more  in line  with                                                               
national standards, he commented.   The tax on recreational motor                                                               
vehicles   [RVs]   is  established   at   3   percent  with   the                                                               
understanding that RVs  will rent on a dollar-per-day  basis 3 to                                                               
5 times as much as an  average passenger vehicle.  This keeps the                                                               
tax  levies in  a proportional  perspective, he  said.   Co-Chair                                                               
Hawker told  the members that  the committee substitute  also has                                                               
administrative provisions  that specify that the  regulations for                                                               
the  administration  of  this  tax shall  be  determined  by  the                                                               
[Department  of  Revenue].   Nothing  in  this  bill in  any  way                                                               
prohibits the lessors of the  vehicles from collecting the excise                                                               
tax from the consumers.                                                                                                         
Number 0421                                                                                                                     
CO-CHAIR HAWKER told the members  that he is comfortable with the                                                               
bill with  respect to the  way it  fits into the  general revenue                                                               
system where funds are not  dedicated, and where revenues come in                                                               
from many  sources such as  oil and  gas revenue excise  taxes or                                                               
fees for  registration of  motor vehicles.   The  general revenue                                                               
system has  not been looked at  for many years, and  is no longer                                                               
consistent  with what  has become  generally accepted  across the                                                               
country in funding of state  governments, he commented.  Co-Chair                                                               
Hawker  explained  that excise  taxes  on  vehicles is  a  common                                                               
mechanism and  this bill is  consistent with what has  been found                                                               
to  be  a   proven  component  of  the   general  revenue  system                                                               
nationwide.   He  told the  members he  believes [this  tax] fits                                                               
into a  comprehensive fiscal  structure for  the state  of Alaska                                                               
that makes sense and is appropriate at this time.                                                                               
Number 0541                                                                                                                     
REPRESENTATIVE WILSON asked what  the estimated revenues for this                                                               
[excise tax] would be.                                                                                                          
CO-CHAIR  HAWKER  replied  that  the fiscal  note  on  the  first                                                               
version  of   HB  271  showed  approximately   $7.5  million  [in                                                               
revenue].  He pointed out that  fiscal note was predicated on all                                                               
vehicles, including recreational vehicles,  being taxed at the 15                                                               
percent  level.   A fiscal  note  reflecting the  changes in  the                                                               
committee substitute  is not yet  available; however, he  said he                                                               
believes there  will be a  proportional reduction in  relation to                                                               
the tax base.                                                                                                                   
CO-CHAIR WHITAKER  added that he  estimates the fiscal  note will                                                               
be around $7  million.  A revised fiscal note  for this committee                                                               
substitute will be provided to the committee soon.                                                                              
Number 0639                                                                                                                     
REPRESENTATIVE  SEATON commented  that  he  believes the  reduced                                                               
rate on RVs makes sense  especially since individuals renting RVs                                                               
are not  only getting a  vehicle, but accommodations  or lodging.                                                               
He  said  the  committee  talked about  the  applicability  of  a                                                               
municipal tax on  vehicles or a bed tax that  could be instituted                                                               
by  a  municipality.   He  stated  he  believes there  should  be                                                               
clarification in the bill on this point.                                                                                        
CO-CHAIR HAWKER  responded that bed  taxes are  usually justified                                                               
as a means  to promote economic development and  tourism, as well                                                               
as a means  of accommodating the costs  that municipalities incur                                                               
as a  result of having tourists  in their midst.   He pointed out                                                               
that from the  standpoint of additional burden  on the community,                                                               
the  motor vehicle  renter  also pays  taxes  through motor  fuel                                                               
taxes and  dumping fees that  are associated  with RVs.   He told                                                               
the members he  does not see the need to  equate the [excise tax]                                                               
to a bed  tax or apply it in  addition to a bed tax.   That would                                                               
be very difficult  to do, he commented.  Co-Chair  Hawker said he                                                               
does  not see  this  excise tax  as  a conflict  with  a bed  tax                                                               
imposed  by   communities  since  they  are   two  different  tax                                                               
REPRESENTATIVE  SEATON explained  that he  is only  interested in                                                               
clarifying the language  as to whether [a bed  tax] is acceptable                                                               
or  not acceptable  [with a  RV rental]  because he  believes the                                                               
question will come up.                                                                                                          
CO-CHAIR  WHITAKER noted  for  the  record, that  Representatives                                                               
Weyhrauch and Samuels had joined the meeting.                                                                                   
Number 0909                                                                                                                     
CO-CHAIR HAWKER  proposed a technical  amendment to Version  S as                                                               
     On page 2, line 15                                                                                                         
     After the words "passenger vehicle"                                                                                    
     Insert the words "or recreational vehicle"                                                                             
CO-CHAIR HAWKER pointed  out that this change  is important since                                                               
there has been a separation  in definitions of passenger vehicles                                                               
and  recreational  vehicles   in  the  bill.     There  being  no                                                               
objection, the technical amendment was adopted.                                                                                 
The committee took an at-ease from 7:18 a.m. to 7:22 a.m.                                                                       
Number 1048                                                                                                                     
REPRESENTATIVE  HEINZE  moved to  report  CSHB  271, Version  23-                                                               
LS0936\S,  Kurtz,  4/23/03,  out  of  committee  with  individual                                                               
recommendations and the accompanying fiscal notes.                                                                              
Number 1123                                                                                                                     
REPRESENTATIVE  KOHRING objected  and  said he  is not  convinced                                                               
that a  tax of this nature  is something that will  be beneficial                                                               
to the  economy.   Representative Kohring  explained that  he has                                                               
not heard  a compelling  argument as  to why  this tax  is needed                                                               
other  than the  fact  that it  is another  revenue  source.   He                                                               
recalled comments  that the industry  needs to contribute  to the                                                               
state in terms of what it consumes  in the wear and tear on roads                                                               
and public  facilities; however,  he said he  has not  heard that                                                               
this  industry  has  been  a  detriment  to  the  infrastructure.                                                               
Representative  Kohring  added that  the  industry  does pay  gas                                                               
taxes, business license fees,  vehicle registration fees, airport                                                               
taxes, and  other [taxes and  fees] of that  nature.  He  said he                                                               
believes the  industry has already  made a  sizeable contribution                                                               
to the state.  Representative  Kohring summarized his comments by                                                               
saying that  he does not  believe this is  a prudent action  at a                                                               
time  when  encouraging economic  development  in  the state  and                                                               
encouraging small  businesses, which are  the backbone of  a good                                                               
strong economy, is essential.                                                                                                   
Number 1326                                                                                                                     
A roll  call vote was  taken.  Representatives  Moses, Gruenberg,                                                               
Wilson, Weyhrauch,  Heinze, Whitaker,  and Hawker voted  in favor                                                               
of   reporting    CSHB   271,   Version   S,    from   committee.                                                               
Representative  Kohring  voted  against   it.    Therefore,  CSHB
271(W&M) was reported out of  the House Special Committee on Ways                                                               
and Means by a vote of 7-1.                                                                                                     

Document Name Date/Time Subjects