Tax plan or payback time?

Rep. Kott proposes tax on rental cars; former lawmaker says the measure is aimed at him

Posted: Thursday, April 24, 2003

Is a legislative bill to tax car rentals in Alaska a plan for new revenues or political payback?

Former Anchorage Republican Rep. Andrew Halcro, who also is president and CEO of Avis Rent-a-Car in Alaska, on Wednesday said House Speaker Pete Kott proposed a 15 percent tax on car rentals as retribution for Halcro's opposition to various plans by Kott in recent legislative sessions.

But Kott, an Eagle River Republican, says the measure is a legitimate attempt to raise about $7.5 million a year for the state. Kott said he intends for half of the money raised to go toward tourism marketing and road maintenance. New revenues, however, cannot be dedicated for any specific purpose.

House Bill 271 would increase the cost of an average car rental by about $6 a day, exempting recreational vehicles such as Winnebagos.

"This is nothing more than a measure to raise some money for the state," Kott said. "Until I heard about it I forgot Andrew was in the car rental business."

Halcro, a moderate who served two terms in the state House and was active in the Fiscal Policy Caucus, said he heard about the bill a day before it was introduced April 15, when a friend who lives in Los Angeles contacted him on a tip she heard from a Juneau lobbyist.

Halcro did not name the sources, but said he was told HB 271 was aimed at him.

He said lawmakers such as Kott have misused their power to "punish their enemies and reward their friends."

"This is personal and this is political," Halcro said, "But (Kott) is not just attacking Andrew Halcro, he's attacking the whole industry."

Halcro said the vendetta could be for a number of reasons but noted he clashed with Kott last year while opposing a $750 million tax incentive for construction of a gas pipeline Kott supported.

Halcro did not say he thought the tax was a personal vendetta against him when he testified against the measure Wednesday in the House Ways and Means Committee. But he did argue that the car rental industry already pays airport and municipal taxes.

He said car rental taxes in Alaska would be the highest in the nation if the proposal is passed into law.

The tax on rentals at Ted Stevens International Airport in Anchorage would increase from 18 percent to 33 percent, and rentals from the Juneau Airport would double to 30 percent. The existing taxes are a combination of airport and city taxes.

"You're taking $7.5 million from an industry that's already contributing, and it still doesn't solve the fiscal gap," Halcro said.

Halcro and Dan Coffey, owner of Dollar Rent A Car in Anchorage, also argued Kott's tax proposal isn't the only one that would hurt the industry.

"This doesn't take into consideration the proposed increase in license fees for vehicles, nor does it take into consideration the proposed tax increases on gasoline," Coffey said.

Halcro noted the industry paid $200,000 last year for parking at the Anchorage airport and that his company alone paid $140,000 on vehicle registration.

Kott said he introduced the bill at the request of Gov. Frank Murkowski, but said he had considered introducing the legislation himself. House Bill 271 is Kott's only bill so far this session.

Kott said the bill still is in the beginning stages of the legislative process and that he plans to introduce a substitute version that would institute a 10 percent tax for automobiles and a 3 percent tax for RVs.

No action was taken by the Ways and Means Committee on Wednesday, and the bill is scheduled for another hearing today at 7 a.m.

Timothy Inklebarger can be reached at timothyi@juneauempire.com.



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