HB 56-PASSENGER VEHICLE RENTAL TAX  1:33:38 PM CHAIR EGAN announced that the first order of business would be HB 56. REPRESENTATIVE LINDSAY HOLMES, sponsor of HB 56, gave a brief overview of the bill that tries to help some of the small businesses in the state that rent motorcycles who are currently subject to a 10 percent rental tax. She explained that back in 2003 when the tax was passed there was no discussion about it and it wasn't clear whether motorcycles fell into the category of "passenger vehicle." The Department of Revenue didn't even realize until 2008 that there even were companies in the state that were renting motorcycles and when they did subjected them to the 10 percent tax. Because of the climate in Alaska motorcycles are only rented about 90 days out of the year and need to be stored the rest of the time. The average cost to rent one is $180-$210 day. Packages are sold to bring people up to ride motorcycles around the state and when they do, they stay in hotels, eat in restaurants and spend money. This bill would exempt motorcycles from the definition of "passenger vehicles" thereby exempting them from the tax. CHAIR EGAN noted a letter from Alaska Motorcycle Adventures in their packets. NANCY HULL, Alaska Motorcycle Adventures, said they rent their motorcycles from the Anchorage area, and 2013 will be their 20th season there. She supported HB 56, because the rental tax affects both motorcycle rentals and Alaska tourism in general. To offset the high vehicle rental tax, her customers choose to rent for fewer days or choose to go somewhere else on the planet. The season of 90 days is very limited, and their rental rates are extremely high. She urged them to get these people to Alaska and send them to McCarthy and Chicken where they spend their tourist dollars in locally owned businesses. She added that she heard someone in Whitehorse was going to start renting motorcycles again, and with the number of Europeans coming over from Frankfurt it would be real easy for them to get off in Whitehorse rather than continuing on to Anchorage. As soon as there is a rental company in Whitehorse they will definitely go for the best motorcycle rate or the lowest cost they can get, and that would mean a lot fewer dollars for the Alaska tourist economy. She would rather that they land here first and then go to the Yukon, so the dollars stay here. 1:40:44 PM SENATOR DYSON asked if Canadian businesses face any different rules for renting motorcycles. MS. HULL said yes and explained that Canadians can rent in Alaska but they are not allowed to take rented vehicles back into Canada. SENATOR DYSON said people will get off the boat in Anchorage, fly to Whitehorse and rent an RV and come back and get the rest of their family. MS. HULL said law applies to any rented vehicle of any type. MS. HULL said that some customers have asked her for a non- logoed motorcycle that they take to the boarder and just hope they will be able to go through as if it's a friend's motorcycle. SENATOR FRENCH asked Ms. Bales to comment on the relatively modest fiscal note. 1:44:32 PM JOHANNA BALES, Deputy Director, Tax Division, Alaska Department of Revenue, said when the original vehicle rental tax was passed, motorcycle rentals weren't recognized; once that was discovered they spoke with the Department of Law who said that motorcycles do fall under the definition of a "passenger vehicle." So they reached out to the companies and brought them into compliance. Based on most other taxes the state brings in, this is fairly insignificant and is a bit difficult for the rental car companies. They have no official opinion on the bill, but at the same time they want to provide as much information as they can and believe it is an "immaterial amount of revenue." SENATOR BISHOP joined the committee. SENATOR DYSON moved to report HB 56 from committee with individual recommendations and attached fiscal note(s). There being no objection, the motion carried.