Legislature(2003 - 2004)
04/08/2003 09:02 AM Senate FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 106(TRA) "An Act relating to studded tires; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. AT EASE 10:11 AM / 10:13 AM Senator Bunde moved to adopt CS SB 106, 23-GS1127\U as a working draft. Co-Chair Wilken objected to give an explanation. Co-Chair Wilken stated the proposed committee substitute includes all changes discussed at the previous hearing. He noted language in Section 2, amending AS 43.98.025(a). Tire fees., would impose a fee of $2.50 on the retail sale of every tire for motor vehicles designed for use on a highway. He commented this would apply to tires for cars and all weights of trucks. Referencing earlier testimony regarding heavy studs and lightweight studs and the subsequent damage they cause to roads, he noted the committee substitute language amending AS 43.98.025(b), would also impose an additional $5 fee per tire for those tires fitted with heavy studs. He noted this provision would take effect July 1, 2004, one year after the effective date of the bill, which he stated would allow retailers to update inventory to include tires fitted with lightweight studs. Co-Chair Wilken continued that the committee substitute language amending AS 43.98.025(d) and (e), provide for quarterly reporting and remittance of the tax receipts by retailers to the Department of Revenue. Co-Chair Wilken next noted language in the committee substitute, amending AS 43.98.025(h) defines "highway" and "motor vehicle" according to AS 28.40.100. Co-Chair Green asked if motor vehicle, in this context would include off-road vehicles. Co-Chair Wilken cited AS 28.40.100(a)(14) as follows: ""motor vehicle" means a vehicle which is self-propelled except a vehicle moved by human or animal power." However, he stated that tires for a 4-Wheeler would not be subject to the tax as such a vehicle is not designed for highway travel. Senator Bunde opined it would be simpler to outlaw heavy studs, as it would achieve the goal of reducing the use of the heavy studs, however he anticipated this tax would decrease their use. Although funds could not be dedicated, he predicted the increased fee for heavy studded tires would allow generate additional income to offset the cost of the damage caused by the tires. Co-Chair Wilken removed his objection to the adoption of the committee substitute and it was ADOPTED without objection. Co-Chair Wilken announced the committee substitute would require a new fiscal note for this bill. LANDA BAILY, Special Assistant and Legislative Liaison, Department of Revenue testified on behalf of Governor Murkowski and Commissioner Corbus in support of this legislation. However, she requested amending the language in Section 2 to provide that the tax receipts be remitted by sellers in a timely manner. She stated this would be consistent with statutes governing the remittance of motor fuel tax receipts. Ms. Baily also requested amending the language in Section 2, relating to AS 43.98.025(g), to clarify the tax would be exempted on the sale of tires sold for resale. She stated this would prevent the tax from being imposed twice. Amendment #4: This amendment inserts "timely" into Sec. 43.98.025(e) of the committee substitute. The amended language reads as follows. (e) A seller timely remitting the fees collected under this section to the department within 30 days after the last day of the preceding calendar quarter may retain five percent of the amount collected, not to exceed $900 a quarter, to cover expenses associated with collecting and remitting the fees. Co-Chair Green moved for adoption. ROBYNN WILSON, Department of Revenue, testified via teleconference from an off-net location that the definition of timely in relation to the submission of motor fuel tax receipts in contained in regulation rather than in statute. She stated the intent is to receive the revenues in a timely manner. Senator B. Stevens understood the language requiring remittance within 30 days of the last day of a quarter, is equivalent to "timely". He asked if similar language is contained in the regulations governing motor fuel tax collection. Ms. Wilson replied that the motor fuel tax regulation in question pertains to the submission of a report of the amount collected. She determined the existing language in the committee substitute would be adequate. Co-Chair Wilken asked whether the insertion of "timely" would be redundant. Senator B. Stevens surmised it would be and noted Ms. Wilson affirmed this in pointing out that the motor fuel tax regulations pertain to reporting, while the committee substitute language pertains to the collection of fees. He asked if the reporting would be submitted annually with remittance occurring quarterly. Ms. Wilson responded the reporting would be submitted quarterly. Co-Chair Wilken and Ms. Wilson established the amendment was not necessary. Co-Chair Green WITHDREW her motion to adopt the amendment without objection. Amendment #5: This amendment inserts "sold for resale" on page 2, line 14 of the committee substitute. The amended language of AS 43.98.025(g) reads as follows. (g) The fees imposed in this section do not apply to tires sold for resale or services sold to federal, state, or local government agencies for official use. Co-Chair Green moved for adoption. Co-Chair Wilken objected for the purpose of discussion. Senator Bunde asked if the intent of this amendment is to establish that the tax would be collected at the point of sale to the consumer. Ms. Baily affirmed. Co-Chair Green asked whether this language could be construed to apply to a used or second-hand tire. Ms. Baily replied the intent is to levy the tax on each tire only once. Co-Chair Wilken indicated the matter would be reviewed to avoid Co- Chair Green's concern. Co-Chair Wilken removed his objection and the amendment was ADOPTED. Co-Chair Wilken announced intent to consider this bill with the updated fiscal note at the following meeting. Senator Olson understood the intent of the fee to generate revenue to offset the impacts vehicles have on roads. He asked if tires sold for vehicles that do not utilize the road system would be exempt from this tax. Co-Chair Wilken cited AS 28.40.100(a)(12) as follows. (12) "highway" means the entire width between the boundary lines of every way that is publicly maintained when a part of it is open to the public for purposes of vehicular travel, including but not limited to every street and the Alaska state marine highway system but not vehicular ways or areas; Senator Olson surmised if the tires would be mounted on a vehicle located in an area containing no public roads the fee would not be levied. He gave an example of a resident in the Village of Savoonga who would drive a truck along the beach to reach a fish camp. Co-Chair Wilken remarked the intent of this legislation is to levy the tax on the purchase of all motor vehicle tires in Alaska. Senator Olson clarified no exemption would be given to tires designed for highway use. Co-Chair Wilken affirmed. Senator Bunde pointed out that the same driver in Savoonga is also paying the motor fuel tax. Amendment #1: This amendment inserts a new subsection to Section 43.98.028(d) to read as follows. (2) studded tires exclusively for use on a motor vehicle that meets the qualifications under AS 28.22.011(a)(1) for exemption from the motor vehicle liability insurance requirement of AS 28.22.011. [Note: This amendment was also referenced as Amendment #6.] Senator Olson moved for adoption. Co-Chair Wilken objected for an explanation. Senator Olson noted Departmental testimony to the damage caused by studded tires and heavy traffic use on publicly maintained roadways and the need to generate revenue to assist with maintenance expenses. He stated that tires that would not be used on publicly maintained roads should not be charged this tax. He spoke to the importance of studded tires for safe travel along unmaintained roads. Senator Olson pointed out that vehicles operating in areas without publicly maintained roads are exempt from registration and he remarked that tires for these vehicles should also be exempted. Co-Chair Wilken clarified that tires purchased for mounting on vehicles operating in communities exempt from vehicle registration would be exempt from the fees proposed in this legislation. Senator Olson affirmed. Co-Chair Wilken maintained his objection. Senator Bunde also objected to the amendment, arguing that supplies, equipment, and goods are transported over publicly maintained roads and highways for use in these communities. Senator Olson countered that the tire tax would be paid on the tires mounted on the vehicles used to transport those goods. A roll call was taken on the motion. IN FAVOR: Senator Olson OPPOSED: Senator Bunde, Senator B. Stevens, Co-Chair Green and Co- Chair Wilken ABSENT: Senator Taylor and Senator Hoffman The motion FAILED (1-4-2) The amendment FAILED to be adopted. Co-Chair Wilken ordered the bill HELD in Committee.