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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 20, 2024
Chairperson Smith opened the hearing for HB2062.
Adam Siebers provided an overview for HB2062 that discontinues in Section 5 (K.S.A. 79-5117) the excise tax currently imposed on the rental or lease of vehicles for a period less than 28 days. In accordance with Section 4 (K.S.A. 79-5117) rental or leased motor vehicles owned by a car rental company and subject to the 3.5 percent excise tax imposed as required by K.S.A. 79-5117 are currently exempt from motor vehicle property taxes. (Attachment 6) Mr. Siebers stood for questions from Committee members.
Kathleen Smith, Kansas Department of Revenue, provided an overview on the fiscal note for HB2062. Passage of the bill would increase property tax revenues by removing a current property tax exemption. She noted the Department of Revenue does not have data on rental or leased motor vehicles valuations and if these motor vehicles would be registered in the state under the provisions of HB2062; therefore, a precise estimate of the amount of increased property tax revenues and its effect on local and state revenues cannot be estimated. Ms. Smith stood for questions from Committee members.
In response to questions, Grace Bolze, Commercial Motor Vehicle, Kansas Department of Revenue, stated for vehicles under 4,500 pounds or less the fee is $35.00 per vehicle. For vehicles that are 4,500 pounds or more, the fee is $40.00 and for electric vehicles, no matter what the weight is the fee is $50.00. Ms. Bolze stated this was the same cost that was charged before the rental vehicle (1991) SB14 came in with a fleet of 250 vehicles or more. It is the same across the board for each vehicle based on the registered empty weight. The calculation for the fiscal note was done with the property tax value.
In response to a question, Deanna Sheppard, Vehicle Services, Kansas Department of Revenue, stated the Department of Revenue does not follow the International Registration Plan (IRP) guidelines. The vehicles would no longer be charged the commercial rate but would be individualized with a registration fee of $35.00 or $45.00 based on the empty weight along with property tax. The vehicles would be charged a property tax and no longer a part of a commercial fleet.
Proponents:
Charles Melton, TURO, Inc. testified as a proponent for HB2062 that 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 by each individual who purchases a car in Kansas, including peer-to-peer car sharing hosts like those who list their vehicles on Turo. Kansas generates $5.6 million annually in revenue from the rental car excise tax but loses an estimated $15.0 million in revenue from property tax exemption, a number recently confirmed by the Kansas Department of Revenue. (Attachment 7) (Attachment 8) (Attachment 9) Mr. Melton stood for questions from Committee members.
Ruth Whittaker, Chamber of Progress, testified via WebEx as a proponent for HB2062 that would discontinue an existing excise tax on rental vehicles and require rental car companies to pay a property tax upon the purchase of the vehicle. HB2062 restores Kansas' traditional property tax policy toward rental cars, allowing for more revenue to be directed to the state's small and rural communities. (Attachment 10) Ms. Whittaker stood for questions from Committee members.
Opponent:
Sean Miller, Enterprise Mobility, testified as an opponent for HB2062 noting the Legislative Post Audit of 1984 put together a study of rental cars in Kansas and found rental companies were avoiding the property tax in Kansas by registering the vehicle somewhere else. Mr. Miller stated on the back of the audit, the Kansas Department's response was the Department questions whether the revenue generated would justify the compliance expenditure. In 1991, the Legislature crafted an excise tax in lieu of property taxes as an efficient and equitable way to collect taxes on each rental transaction that occurs in Kansas regardless of where the car is registered and have those taxes returned to Kansas counties. Mr. Miller stood for questions from Committee members. No testimony was submitted.
Written only testimony as an opponent for HB2062 was submitted by Don L. McNeely, Kansas Automobile Dealers Association, (Attachment 11)
There being no further conferees, Chairperson Smith closed the hearing for HB2062.
