Legislature(2003 - 2004)
03/09/2004 09:03 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE BILL NO. 347 "An Act exempting taxicabs from the passenger vehicle rental tax; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Wilken stated that this legislation would exempt taxicabs from the ten percent vehicle tax imposed on the lease and rental of passenger vehicles. The bill, he continued, would also exempt taxicabs from the definition of what constitutes a passenger vehicle. SUE STANCLIFF, Staff to Representative Pete Kott, the bill's sponsor, concurred with Co-Chair Wilken's analysis of the bill. Amendment #1: This amendment changes the bill's title to read as follows. "An Act exempting taxicabs and certain other motor vehicles from the passenger vehicle rental tax; and providing for an effective date." In addition, the amendment deletes, in Section 1, subsection (2)(E), the word "or" on page two, line two and inserts language on page two, line three following the word "taxicab." This language would read as follows. (E) a taxicab, [or] (f) a vehicle that is used exclusively for the hauling or delivery of cargo; Furthermore, the amendment inserts new language in Sec. 2, page two, line seven following "taxicabs" as follows. IMPLEMENTATION. The Department of Revenue shall refund any tax collected and remitted to the department under AS 43.52.010 - 43.52.099 on the rental of taxicabs and other rentals that are exempt from the passenger vehicle rental tax because of the amendments to AS 43.52.099(2) made by sec.1 of this Act for rentals made on or after January 1, 2004,… New Text Underlined [DELETED TEXT BRACKETED] Co-Chair Green moved for the adoption of Amendment #1. Co-Chair Wilken objected for purposes of an explanation. Co-Chair Green explained that this amendment would expand the bill's title to include "and certain other vehicles," and would, therefore serve to exclude certain vehicles used for the hauling and delivery of cargo. She noted that vehicles exceeding 26,000 pounds are exempt from the tax and this amendment, she stated, would expand that exemption to include such vehicles as U-Haul moving vans that exceed 10,000 pounds. She noted that the Municipality of Anchorage already exempts these vehicles from the tax. She noted that this issue could either be addressed locally as Anchorage has done or via this amendment. She noted that there would be minimum fiscal impact incurred by this exemption. Ms. Stancliff stated that the bill's sponsor has no objection to the amendment. Continuing, she agreed that while the issue could be addressed locally, amending the legislation would be "the simplest approach." She stated that it was not the intent of the original bill to negatively impact small businesses. LANDA BAILY, Special Assistant, Office of the Commissioner, Department of Revenue, stated that in addition to discussing the amendment with the both the bill and the amendment's sponsors, she had conferred with Dan Dickinson, Director, Tax Division, Department of Revenue. Mr. Dickinson, she shared, stated that this amendment mirrors the Municipality of Anchorage's exemption language, and would not present any administrative issues to the Tax Division. Co-Chair Wilken removed his objection. Senator Bunde objected, as he declared that taxes are imposed to raise money. Therefore, he continued, exempting anyone from a tax is contrary to the desired affect, particularly in light of the State's current fiscal direction. A roll call was taken on the motion. IN FAVOR: Senator B. Stevens, Co-Chair Green, Senator Olson, Senator Hoffman, Senator Dyson, and Co-Chair Wilken OPPOSED: Senator Bunde The motion PASSED (6 - 1) Amendment #1 was ADOPTED. JOHN NORRIS, President, U-Haul Company of Alaska, testified via teleconference from an offnet site on behalf of the 54 U-Haul locations in the State. He urged that the amendment be approved as he noted that the ten percent tax as originally presented was intended to apply to out-of-state tourists for any passenger car rental rather than to Alaska residents using such things as rental trucks. However, he stated that the original bill only exempted vehicles in excess of 26,000 pounds. He stated that a ten percent tax on truck rentals would present a hardship for citizens and businesses. Senator Bunde pointed out that the passenger car rental tax applies to everyone renting a car, including Alaskan residents. MICHAEL BELL, Representative, Alaska Trucking Association, testified via teleconference from an offnet site and voiced support for the amendment as he noted, "the vast majority" of trucks used to transport and deliver goods in cities, such as grocery delivery trucks, weight less than 26,000 pounds. He stated that were a business's truck to breakdown, it would be required to rent a replacement and be subject to the ten percent tax. He stated that this tax would present a hardship to the company as in most cases it would be unable to pass the burden of the tax on to the end user, as rental surcharges are not usually included in contracts. Co-Chair Wilken stated that this bill would be HELD in Committee.