Bill would put 15 percent tax on car rentals

Posted: Thursday, April 24, 2003

JUNEAU (AP) House Speaker Pete Kott wants to make travelers help pay for Alaska government by putting a 15 percent state tax on car rentals.

The Eagle River Republican said the tax, which would raise about $7.5 million, would be less painful for Alaskans than other measures being suggested to balance the state budget.

I believe in most cases Alaskans are not going to be affected,'' Kott said. When was the last time you rented a car in Alaska when you actually had to pay for it?''

Government rentals would be exempt, and if someone had to rent a car while theirs was in the shop, an out-of-state insurance company would probably foot the bill, Kott said. He estimated tourists would pay 80 percent of the tax.

But car rental companies say Kott's proposal would impose the highest tax in the country on their businesses at a time when the tourism industry is expecting a bleak season.

Dan Coffey, an owner of Dollar Rent a Car in Anchorage, told the House Ways and Means Committee on Wednesday that rental car customers in Anchorage already pay more than $8 million dollars in state and local taxes and fees.

That's from an 8 percent Anchorage rental car tax on top of a 10 percent airport fee.

Former legislator Andrew Halcro, who runs Avis Rent a Car in Alaska, said the tax would come at a time when business is already flat or declining.

Halcro, who as a legislator advocated a long-range plan to solve the state's budget gap, said the $7.5 million gained would do little to close a fiscal gap projected at $460 million in 2004 and $898 million the following year.

All you're doing is putting your foot on the throat of an industry while failing to solve a problem,'' Halcro said.

Halcro said lawmakers should instead be looking at a 2 or 3 percent sales tax that would raise substantially more money without singling out one segment of the tourism industry. He also suggested they consider taxing the cruise ship industry, which he said does not pay its share.

Kott has said he did not support a cruise ship tax because it would target a single sector, and it does not have support in the House Republican majority caucus.

Halcro questions whether Kott is backing a tax on his industry because as a legislator he was outspoken in disagreements with Kott on a number of issues. Kott said that's absurd.

I don't hold any grudges against anybody,'' Kott said. I still view Andrew as a former colleague and friend.''

Halcro himself introduced a car rental tax bill in 1999, but he said that was before Anchorage passed its tax and was intended to be part of a larger package. He said lawmakers later realized the extent of the fiscal gap was so great that such nickel and dime'' measures would do little good.

The Ways and Means Committee is to continue debating House Bill 271 Thursday. It's scheduled for a hearing in the House Finance Committee on Friday.

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