Legislature(2003 - 2004)
04/24/2003 07:10 AM W&M
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 committee. 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 structures. 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 follows: 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.