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Minutes for HB2062 - Committee on Taxation
Short Title
Discontinuing the excise tax on rental and leased motor vehicles and imposing property tax on such vehicles.
Minutes Content for Wed, Mar 1, 2023
Chairperson Smith opened the hearing for HB2062.
Adam Siebers, Revisor, provided an overview for HB2062 stating Section 5 will discontinue the excise tax currently levied on rental or leased vehicles for a period of less than 28 days. Commencing July 1, 2023 this 3.5 percent excise tax on the gross receipts would no longer be imposed. Section 4 of HB2062 for rental or leased vehicles owned by a car rental company and subject to the 3.5 percent excise tax which is under current law are currently exempt from motor vehicle property taxes. Under HB2062 this exemption would be removed; therefore, the rental or leased vehicles would now be subject to property tax effective July 1, 2023. (Attachment 1) Mr. Siebers stood for questions from Committee members.
Kathleen Smith, Kansas Department of Revenue, presented an overview on the fiscal note for HB2062 that would increase property tax revenues by removing the current property tax exemption. The state would receive additional property tax revenues to the two state building funds and the bill would increase the revenues to any local government that levies a property tax. She stated the Department of Revenue does not have data on rental or leased motor vehicle valuations and if those motor vehicles would then be registered in the state of Kansas under the provisions of HB2062; therefore, they could not provide a a precise estimate. Ms. Smith stated there are around 15,000 motor vehicles registered in the rental fleet system. Ms. Smith stood for questions from Committee members.
In response to a questions, Ms. Smith will provide an answer to Committee members regarding if taxi cabs pay an excise tax or property tax.
Proponents:
Laura Manno, Turo, Inc., testified as a proponent for HB2062 stating it is a bill of fairness and sound tax policy. The bill would eliminate the excise tax for those renting vehicles in Kansas and reinstate the property tax on vehicles purchased by rental car companies as is required of others who purchase vehicles in Kansas. Kansas generates $3.7 million annually in revenue from the rental car excise tax but loses an estimated $20.7 million in revenue from the property tax exemption. Currently, Kansas residents can cross the border into Missouri to get a rental car without paying an excise tax. (Attachment 2) Ms. Manno stood for questions from Committee members.
In response to a question, Ms. Manno stated the $20.7 million in loss revenue was an estimation based off the rental car industry's own representation of how many cars they had in the state. She stated she will provide background information to Committee members on the exact calculation for the $20.7 million in loss revenue.
Ruth Whittaker, Chamber of Progress, testified as a proponent for HB2062 that would restore Kansas' property tax policy toward rental cars, allowing for more revenue to be directed to the state's small and rural communities. HB2062 will increase state tax revenue by an estimated $20.7 million annually helping to fund state needs. (Attachment 3) Ms. Whittaker stood for questions from Committee members.
Written testimony was submitted by the following as proponents for HB2062:
Kouri Marshall, Chamber of Progress, (Attachment 4)
Michael Austin, Americans for Prosperity, Kansas, (Attachment 5)
Opponents:
Art Diaz, Enterprise Car Rental, testified as an opponent for HB2062 noting Enterprise collects and remits state and local sales tax on each transaction. In 1991, a Senate bill was passed where rental car companies would no longer be required to pay the vehicle property tax in exchange for an excise tax. Enterprise does believe an important issue is full disclosure of all taxes, fees and charges to the consumer in advance. Mr. Diaz presented a proposed substitute for HB2062 in his testimony. (Attachment 6) Mr. Diaz stood for questions from Committee members.
Written testimony was submitted by the following as opponents for HB2062:
Don McNeely, Kansas Automobile Dealers Association, (Attachment 7)
Sharon Faulkner, American Car Rental Association (ACRA), (Attachment 8)
Chairperson Smith closed the hearing for HB2062.
