HB 106-REPEAL FEES FOR STUDDED TIRES 1:06:55 PM CHAIR JOHANSEN announced that the first order of business would be HOUSE BILL NO. 106, "An Act repealing fees imposed on the sale of new tires, the sale of certain studded tires, and the installation of certain metal studs on tires; and providing for an effective date." 1:07:07 PM JERRY BURNETT, Director, Administrative Services Division, Department of Revenue (DOR), said that the fiscal note reflects a small loss of revenue. He observed that collection of this tax is not a good use of the department's time and that it is not fair to penalize the public for using safer tires. REPRESENTATIVE FAIRCLOUGH offered her belief that the tax is based on the increased road wear from the use of studded tires. MR. BURNETT responded that this is correct. He reported that the Alaska State Troopers continue to use the heavy studded tires for safety. He noted that although there is tax revenue, the tax has not resulted in a decrease of the use of the heavy studded tires and the subsequent wear on the roads. REPRESENTATIVE FAIRCLOUGH asked if the sale of studded tires is decreasing. MR. BURNETT replied that the tax does not reflect an increase in the purchase of alternative tires. He offered that the department's belief is this tax penalizes people for having safer tires. 1:09:53 PM REPRESENTATIVE FAIRCLOUGH asked how the department knows that more of the alternative tires are not being sold. MR. BURNETT explained that DOR does track the tax, so they know how many of each type of tire is sold. REPRESENTATIVE NEUMAN noted that the bill retracts the tax on all studded tires, and asked if this precludes the sale of studded tires. MR. BURNETT pointed out that the bill eliminates this tax on all the tires, and it will have no effect on the availability of the tires. 1:11:40 PM REPRESENTATIVE SALMON asked if the tax applies to all tires or just studded tires. MR. BURNETT replied that the tax on studded tires is $5 per tire and $2.50 per tire on non-studded tires. REPRESENTATIVE DOOGAN commented that there has been a lot of testimony on the bad effects of studded tires on road surfaces. He asked if the administration has decided that the $1.5 million net profit on the tax is too insignificant an amount to use for repair. MR. BURNETT responded that the administration has decided that $1.5 million is insignificant to the total revenue. REPRESENTATIVE DOOGAN allowed that this is true only as long as the price of oil stays high. MR. BURNETT declared that this is an administratively inefficient tax as it is the only tax paid directly at the retail level. REPRESENTATIVE DOOGAN posed that it is inefficient because the sales people have to collect the taxes and pay this to the DOR. He asked how gasoline is taxed. MR. BURNETT responded that cigarette, alcohol, and fuel are all taxed at the wholesale level. CHAIR JOHANSEN closed public testimony. 1:14:35 PM REPRESENTATIVE KELLER recounted that a constituent who owns a tire store experimented with lightweight studs and found them to be worthless. REPRESENTATIVE NEUMAN analyzed and compared the cost of road wear from studded tires to the costs of insurance, medical bills, and lives. He allowed that passage of this bill would put more money in the consumers' pockets. REPRESENTATIVE DOOGAN testified that he is also a supporter of studded tires, but that the larger issue is the administrative arguing that the legislature spends too much money, while simultaneously proposing to rescind a revenue source. 1:19:13 PM REPRESENTATIVE FAIRCLOUGH voiced support to the earlier comments, and asked what the administration is offering as revenue sources should the oil prices drop. CHAIR JOHANSEN summarized that he is not a fan of taxes, especially safety taxes. REPRESENTATIVE NEUMAN moved to report HB 106 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 106 moved out of committee.