2003-03-07                     House Journal                      Page 0464
HB 90                                                                                             
The House Special Committee on Fisheries has considered:                                            
                                                                                                    
     HOUSE BILL NO. 90                                                                              
     "An Act relating to a salmon product development tax credit under                              
     the Alaska fisheries business tax and the Alaska fisheries resource                            
     landing tax; and providing for an effective date."                                             
                                                                                                    
and recommends it be replaced with:                                                                 
                                                                                                    

2003-03-07                     House Journal                      Page 0465
     CS FOR HOUSE BILL NO. 90(FSH)                                                                  
     "An Act relating to a salmon product development tax credit under                              
     the Alaska fisheries business tax; and providing for an effective                              
     date."                                                                                         
                                                                                                    
The report was signed by Representative Seaton, Chair, with the                                     
following individual recommendations:                                                               
                                                                                                    
Do pass (2):  Kott, Wilson                                                                          
                                                                                                    
Amend (3):  Samuels, Guttenberg, Seaton                                                             
                                                                                                    
A House Special Committee on Fisheries letter of intent for                                         
CSHB 90(FSH), signed by Representative Seaton, Chair, follows:                                      
                                                                                                    
"The following two points are recommendations from the House                                        
Special Committee on Fisheries for CSHB 90 (FSH), "An Act relating                                  
to a salmon product development tax credit under the Alaska fisheries                               
business tax; and providing for an effective date."   The Fisheries                                 
Committee passed out CSHB 90 (FSH) with the understanding that                                      
these issues would be resolved.                                                                     
                                                                                                    
1) The term "value-added salmon products" [AS 43 Sec. 75.035(g)(3)]                                 
should be better defined.  This definition must be clarified to prevent                             
abuse of the tax credit and decrease enforcement costs.  As                                         
CSHB 90 (FSH) is written, many processes associated with standard                                   
processing are included in the definition.  For example, the phrase                                 
"beyond gutting of the salmon" (line 22) would allow a heading                                      
machine to qualify for a tax credit if it is not explicitly prohibited.  At                         
least, this language should also prohibit traditional heading.  The                                 
Department of Revenue (see attached fiscal note analysis) has                                       
suggested defining the terms "value-added" and "salmon product"                                     
separately.  The Dept. of Revenue has also suggested defining "salmon                               
product" negatively (i.e. defining what should not be considered value                            
added).                                                                                             
                                                                                                    
2) A "claw-back" provision for the tax credit should be considered.                                 
Such a provision would protect the State of Alaska from abuse of the                                
credit.  As the Department of Revenue has noted in their fiscal note                                
analysis,  "Investment credits are normally complimented by recapture                               
provisions.  Recapture, or "claw back" rules, reclaim all or part of the                            
credit if the taxpayer does not follow through" (P.5)."                                             

2003-03-07                     House Journal                      Page 0466
The following fiscal note(s) apply to CSHB 90(FSH):                                                 
                                                                                                    
1.  Fiscal, Dept. of Revenue                                                                        
                                                                                                    
HB 90 was referred to the Resources Committee.