Master FIR (1988)

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F I S C A L I M P A C T R E P O R T

SPONSOR:	Fidel		DATE TYPED:	02/02/99		HB
SHORT TITLE:		Motor Vehicle Excise Tax Exemption				SB	105
					ANALYST:		Taylor

REVENUE

Estimated Revenue		Subsequent Years Impact	Recurring or Non-Rec	Fund Affected
FY99	FY2000	Subsequent Years Impact	Recurring or Non-Rec	Fund Affected
$ 0.0	$ (1,050.0)	$ (1,200.0)	Recurring	General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

Taxation and Revenue Department

SUMMARY

Synopsis of Bill

Senate Bill would provide an exemption to the motor vehicle excise tax for heavy vehicles weighting more than 26 thousand pounds which are purchased for leasing. The term of the lease must be at least six months and subsequent lease would be subject to the gross receipts tax. Current law provides such an exemption for other leased vehicles but specifically excludes heavy vehicles. The exemption would become effective at the beginning of FY2000.

FISCAL IMPLICATIONS

The Taxation and Revenue Department estimates that the proposed exemption would cost the General Fund $1.05 million in FY 2000, and $1.2 million in FY 2001. The estimate was based on a sampling of motor vehicle registration records.

They also show a small positive impact on local governments. Presumably this is because the receipts from the subsequent lease are subject to the gross receipts tax.

ADMINISTRATIVE IMPLICATIONS

TRD reports minimal administrative impact.

OTHER SUBSTANTIVE ISSUES

TRD notes that the provisions of this bill serve to avoid double taxation (pyramiding) and extend the same anti-pyramiding provisions provided to the gross receipts tax to the motor vehicle excise tax.

TRD suggest that the benefits of the tax deduction may not be passed on to the persons leasing the vehicle. Whether this is true or not depends on how competitive the industry is and whether information regarding the exemption is widely available. Assuming a competitive industry and good access to information, the deduction should be passed on to the individual leasing the vehicles.

BT/njw