"An Act excluding certain trucks and vehicles provided by automobile dealers as replacement transportation during warranty, recall, or service contract repairs from the definition of 'passenger vehicle' for purposes of the passenger vehicle rental tax; and providing for an effective date. "
"In 2004 HB 347 was introduced to correct the unintended consequence created by HB 271 and provided an exemption for taxicabs."
- Sen. Huggins
House CS for SB 174(FIN) will correct unintended consequences of legislation passed in 2003.
In 2003 the Alaska State Legislature passed HB 271 as a tourism-based tax on passenger rental cars and recreational vehicles. The purpose of the tax was to tax visitors using our road system, not local citizens. However, House Bill 271 has negatively impacted the following:
Alaska citizens needing to move,
Our local independent outlets,
The consumer truck rental business overall.
The Department of Revenue has assessed the tourism-based tax on all rental vehicles, including trucks less than 26,000 pounds. This interpretation of the law results in the 10% tax being applied to Alaska businesses and citizens renting trucks. The 10% state tax, along with the local municipal and city taxes adds considerably to the total rental fee.
The second category impacted relates to rental vehicles when provided by an automobile dealer to a customer, as replacement transportation during warranty, recall, or service contract repairs. HCSSB 174 (FIN) clarifies that under this instance the customer and or dealership is exempt from the imposed vehicle rental taxes.
HCSSB 174(FIN) will ensure that the tax applies more specifically to the intended target of visitors renting passenger vehicles and recreational vehicles, rather than the unintended target of Alaska businesses and citizens.