Legislature(2003 - 2004)

03/09/2004 09:03 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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.                                                            

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