Legislature(1995 - 1996)
01/17/1996 05:04 PM House FSH
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 396 - FISHERIES RESOURCE LANDING TAX HB 397 - SEAFOOD MARKETING ASSESSMENT CHAIRMAN ALAN AUSTERMAN announced that the agenda was HB 396 and HB 397. He added that since the calendar was published, a sponsor substitute for HB 397 (SSHB 397) was introduced which combined HB 396 and HB 397 into one bill. Number 090 REPRESENTATIVE KIM ELTON moved that the committee take up SSHB 397. Number 109 Hearing no objections, CHAIRMAN AUSTERMAN announced that the committee would address SSHB 397 and introduced Amy Daugherty. Number 150 AMY DAUGHERTY, Committee Aide, House Special Committee on Fisheries, Alaska State Legislature, provided information on SSHB 397. She said that SSHB 397 was designed to more precisely align the current fisheries resource landing tax with the fisheries business tax and the Alaskan Seafood Marketing Institute (ASMI) assessment. She stated that SSHB does this by clarifying the landing tax as an occupational tax and equalizes tax rates and credits with the fisheries business tax. MS. DAUGHERTY said that the legislation came about through discussions with the Department of Revenue (DOR) about the legal challenges affecting the landing tax and its revenues, and of the need to clarify the intent of this tax by aligning the landing tax with the fisheries business tax. She provided some history to SSHB 397 stating, prior to January 1, 1994 offshore fishery resources were not subject to any Alaska fishery tax. She added that these revenues were important to the state and to the sharing communities who are impacted by the offshore fisheries. Number 292 REPRESENTATIVE GARY DAVIS asked for a brief outline, of the two taxes and revenues from those taxes, from the DOR. Number 335 BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division, DOR, provided information about current taxes involving the fishing industry. He said the fisheries resource landing tax was instituted in 1994 to establish a tax comparable to the tax that was implemented and revised since the early 1900s for those who fished within the three mile limit. Until 1994, resources that were caught outside the three mile limit and brought inside the three mile limit, had not been subject to any tax despite the fact that they used state and local resources. The Alaskan state legislature enacted the 1994 Fisheries Landing Tax, including an assessment for ASMI within one statutory reference. The industry, that was subject to the tax, took it Superior Court and then to the Supreme Court. The Supreme Court ruled that the industry needed to use the administrative appeal process within the DOR. He said the affected industry was currently in this process. Number 473 MR. BARTHOLOMEW said the affected industry challenged the fisheries resources landing tax by saying it was not a business but a property tax whereas the DOR felt that it was similar to the fisheries business tax already in place. He said the intent of SSHB 397 was to tax all businesses benefiting from Alaskan resources. He said the DOR supports the legislation to improve the statutes and added that the DOR had a zero fiscal note because it has a negligible impact on the taxpayer or on the DOR. He said SSHB 397 clarifies how the tax works and it's intent. MR. BARTHOLOMEW said that SSHB 397 adds, under the fisheries landing resources tax, the ability to take an education credit. The other fishery business tax allows tax credits for contributions to certain educational institutions. He said it makes sense for both taxes to have an education credit. SSHB 397 allows for a lower rate on development of fisheries which amounts to less than two-tenths of 1 percent of the resources that are caught. It does allow a lower rate for resources that are determined to be developed by the Department of Fish and Game. SSHB 397 adjusts the sharing provisions to make sure that it aligns up with the other changes that are taking place so that it doesn't reduce or change that amount of money shared with local governments. MR. BARTHOLOMEW said that currently the landing tax and an ASMI assessment are combined into one rate of 3.3 percent. The fisheries business tax, which is a separate tax on resources caught within the three mile limit, has a 3 percent rate and then under a separate statute the DOR accesses a ASMI assessment of .3 percent. The legislature in the 1994 fisheries resources landing tax combined those two rates into one statute for a total of 3.3 percent. One of the contentions of the industry is that the DOR is taxing resources caught outside the state boundary at a higher rate because of this inclusion of the ASMI assessment rate. SSHB 397 reduces the fishery landing tax in the statute from 3.3 percent to 3 percent. The ASMI statute would then institute a .3 percent ASMI assessment. Number 731 REPRESENTATIVE G. DAVIS asked for more details on the Supreme Courts decision to refer the industries complaint back to the DOR. Number 743 MR. BARTHOLOMEW said that under the tax codes there is a process put into the statutes and regulations for a taxpayer to appeal. If the taxpayer feels he/she has been treated unfairly, there is an informal level where it is reviewed by appeals officers, of the Income and Excise Audit Division of the DOR, who issue a ruling. After that process there is a second level called the formal hearing level which is currently in the commissioners office. At this point a hearing officer will take a second look at their case and rule one way or the other. The last avenue of appeal, if he/she still feels the two reviews have been unfair, is to go back to court. Historically the courts have always ruled that when statutes authorize an administrative process a taxpayer must first go through this process. The fishing industry who opposes the fishery resources landing tax is at this informal level. Number 817 REPRESENTATIVE G. DAVIS asked if the Supreme Court responded to any constitutional issues. Number 829 MR. BARTHOLOMEW said that the court did not address constitutional issues, but wanted the specific issues defined in the administrative appeals level. Number 848 REPRESENTATIVE G. DAVIS addressed concern about skirting the dedicated tax issue in many areas and departments in the state. He added that he does not have any problem with SSHB 397. CHAIRMAN AUSTERMAN asked what Representative Davis was referring to as dedicated taxes. REPRESENTATIVE G. DAVIS said he was referring to the .3 percent ASMI assessment. He said that anything outside income received to the states general fund would be deemed as a dedicated tax. Number 901 REPRESENTATIVE ELTON addressed Representative Davis' concern by saying that there is no dedication to ASMI. In the last 15 years money has been collected, especially from the volunteer processor tax, and returned to the taxpayers in the form of seafood marketing. He said there is a moral obligation to pay this tax but not a dedication to that fund. Representative Elton stated that there is nothing allowing this committee to reappropriate that money to ASMI. Number 999 There being no further discussion on SSHB 397, REPRESENTATIVE ELTON made a motion to move SSHB 397 out of the House Special Committee on Fisheries with individual recommendations. Hearing no objection, it was so ordered.
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