SENATE BILL NO. 178 "An Act relating to the application of the passenger vehicle rental tax; and providing for an effective date." 11:08:07 AM Commissioner Bishop explained that SB 178 would provide clarification of the intent of the rental car tax. It would amend statute to make it clear that the rental vehicle tax would not apply to Alaska business making long-term rentals to other Alaska businesses. 11:09:52 AM AT EASE 11:10:15 AM RECONVENED 11:10:31 AM Co-Chair Kelly MOVED to ADOPT the committee substitute CS SB 178(FIN), work draft 28-LS1406\Y (Strasbaugh, 3/28/14). There being NO OBJECTION, it was so ordered. BRITTANY HUTCHISON, STAFF, SENATOR CLICK BISHOP, explained the changes to the CS. Section 1, page 1, line 4 was a housekeeping section, which consolidates a terms for passenger and recreational in order to better organize the statute. Section 2, page 1, line 10 reduces the term from 90 days to 28 days of which a rental vehicle is exempt from the tax. Therefore, a rental vehicle was exempt if it was 28 days or more and had a written contract. It also exempted an extension of the contract, as long as the extension took place before the 28 day period, with no break in the initial period and extension. This was intended to coincide with current rental company contracts, and because most visitors did it for less than 28 days. Section 3, page 2, line 6 consolidated the terms passenger and recreational, and the statute clearly stated that passenger vehicles were taxed at 10 percent of all costs and fees, and recreational vehicles were taxed at 3 percent of all costs and fees. Section 4, page 2, line 13 repeals AS 43.52, sections 30 and 40, because the consolidations in Sections 1 and 3 eliminated the requirement. The committee substitute from the Transportation Committee had two sections that had since been removed: a section decreasing the gross vehicle weight and the other dealt with further defining a passenger vehicle. She stated that the definition of a passenger vehicle was removed, because the department stated that it would be too difficult to implement. Currently in statute, vehicles currently over 8500 pounds were exempt from the tax. The purpose of the legislation was to clarify which rental vehicles would be covered by the tax. It was intended that only passenger rental cars as described in AS 43.52 should be taxed. Co-Chair Meyer wondered if the letter of intent would follow the bill. Ms. Hutchison replied the letter of intent would not be attached to the bill. JOHN MANLY, STAFF, SENATOR CLICK BISHOP, introduced himself. SB 178 was HEARD and HELD in committee for further consideration.