Legislature(2003 - 2004)
02/26/2003 08:34 AM House FSH
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON FISHERIES
February 26, 2003
8:34 a.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Peggy Wilson, Vice Chair
Representative Pete Kott
Representative Cheryll Heinze
Representative Ralph Samuels
Representative Ethan Berkowitz
Representative David Guttenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
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."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 90
SHORT TITLE:TAX CREDIT FOR SALMON DEVELOPMENT
SPONSOR(S): REPRESENTATIVE(S)STEVENS
Jrn-Date Jrn-Page Action
02/10/03 0170 (H) READ THE FIRST TIME -
REFERRALS
02/10/03 0170 (H) FSH, RES, FIN
02/10/03 0170 (H) REFERRED TO FISHERIES
02/12/03 0203 (H) COSPONSOR(S): WOLF
02/26/03 (H) FSH AT 8:30 AM CAPITOL 124
WITNESS REGISTER
CHERYL SUTTON, Staff
to the Joint Legislative Salmon Industry Task Force
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 90 on behalf of the sponsor,
Senator Ben Stevens, who chairs the Joint Legislative Salmon
Industry Task Force.
CHUCK HARLAMERT, Juneau Section Chief
Tax Division
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Discussed the department's concerns and the
fiscal note as it related to Version D.
BUCK LAUKITIS, President
North Pacific Fishing Association
Homer, Alaska
POSITION STATEMENT: During discussion of HB 90, testified in
support of the incentive process.
CHRIS GARCIA
Cook Inlet Fisherman's Fund
Kenai, Alaska
POSITION STATEMENT: During discussion of HB 90, testified in
support of the intent of [Version D].
NORMAN COHEN, Attorney at Law
Bering Sea Fisherman's Association
Juneau, Alaska
POSITION STATEMENT: During hearing on HB 90, testified on
behalf of the Bering Sea Fisherman's Association in support of
[Version D] and its intent.
ACTION NARRATIVE
TAPE 03-10, SIDE A
Number 0001
CHAIR PAUL SEATON called the House Special Committee on
Fisheries meeting to order at 8:34 a.m. Members present at the
call to order were Representatives Seaton, Wilson, Heinze,
Samuels, Guttenberg, and Berkowitz. Representative Kott arrived
while the meeting was in progress.
HB 90-TAX CREDIT FOR SALMON DEVELOPMENT
CHAIR SEATON announced that the only order of business would be
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."
Number 0390
CHERYL SUTTON, Staff to the Joint Legislative Salmon Industry
Task Force ("Task Force"), Alaska State Legislature, provided a
sponsor statement on behalf of Senator Ben Stevens, sponsor, who
chairs the Task Force. She informed the committee that there is
a proposed committee substitute (CS) that reflects some of the
recommended amendments from the Department of Revenue, which
were attached to the fiscal note.
Number 0573
CHAIR SEATON asked if there were any objections to adopting the
proposed CS, Version 23-LS0525\D, Utermohle, 2/25/03. There
being no objection, Version D was before the committee.
MS. SUTTON referred to the sectional analysis and the list of
the changes incorporated in Version D, which are both included
in the committee packet. She explained that the purpose of
HB 90 is to provide a salmon product development tax credit,
under the Alaska Fisheries Business Tax, for the purpose of
developing value-added salmon products. The belief is that the
bill will provide incentive to the processing sector that now
exists. The prospect of receiving a tax credit could be an
incentive to the many small entities and individuals to enter
into the industry. The tax credit is applied toward the
property, and there are strict requirements in the bill
regarding what can receive the tax credit. The intent of the
proposed committee substitute, she explained, was to eliminate,
as much as possible, any potential abuses of the tax credit.
MS. SUTTON referred to Section 1 of Version D, which sets forth
the salmon product development tax credit. Section 1 delineates
how and where this will work, as well as how the tax credit
applies and capture the taxes. Furthermore, [Section 1] ensures
that anyone in arrears in any assessment or taxes under Title
16.51.120 [Salmon Marketing Tax] or worker's compensation under
AS 23.20 or other taxes or assessments under the revenue code
may not receive the tax credit. The intent is to ensure that
qualified individuals receive the credit.
MS. SUTTON turned attention to the definitions in this section,
specifically on page 2, line 20, where the definition of
"qualified investment" includes the word "predominately". She
explained that the tax credit goes to the equipment and to
ensure that the equipment is used predominately to produce
value-added salmon products; the Department of Revenue had
recommended this change. Also, on line 22, the word "after" was
changed to "beyond". In addition, the word "heading" was
eliminated. She said the intent was to ensure that value-added
salmon products go beyond basic gutting of fish, and referred to
the listing of what can be included. She said "heading" was
eliminated because "split sides, head on" is an example of a
value-added salmon product that is produced with the head on.
Number 1113
MS. SUTTON referred to Section 2, which holds the municipalities
harmless relative to their share of the fisheries business tax.
Currently, the bill is structured such that the state will bear
the entire burden in terms of the share. She mentioned that
this issue would be taken up in the House Finance Committee.
She pointed out that the resource landing tax was eliminated
from the bill because it is illegal to harvest salmon outside of
state waters. There is an incidental harvest that is landed,
and there is a small tax that is collected. She said they
didn't want to encourage people to illegally catch salmon and
then add value to them, so that tax was eliminated from the
bill. It was originally included because there was a question
as to whether there was a discriminatory issue. It was
eliminated simply because it does not apply, she stated.
Number 1274
MS. SUTTON pointed out that the remaining changes to the bill
are conforming section numbers and references. She referred to
Representative Kott's knowledge of the interstate commerce
clause violations and mentioned the benefit to Alaska businesses
and not providing the same benefit to non-Alaskan businesses.
She explained that the language was in the bill to protect the
state in the event that someone is successful in litigation,
which is when these clauses would come into effect to protect
the state's interests.
REPRESENTATIVE BERKOWITZ asked if there is any indication of a
commerce clause problem.
MS. SUTTON replied that there were lingering issues from a
similar bill in 1986, and to protect the state's interests,
[Legislative Legal and Research Services] thought it was in the
state's best interests to include these in the measure. She
said she hasn't been contacted by anyone and doesn't anticipate
litigation.
REPRESENTATIVE BERKOWITZ commented that it was perplexing to be
subjected to commerce clause problems by adjusting in-state
taxes.
MS. SUTTON responded that it was the fairness issue of the
interstate commerce clause.
Number 1428
CHAIR SEATON asked if there was a question about products such
as pollock or [sablefish/blackcod] being harvested that
pertained to not residing in the state; he asked about the
origination of the lingering problem or question.
MS. SUTTON said the "lingering issues," as explained by
Legislative Legal and Research Services, surround the bill
passed in 1986, which largely benefited the ground fisheries and
the hugely developed surimi industry. She said, as far as she
knows, there was no litigation.
Number 1518
REPRESENTATIVE GUTTENBERG referred to page 2, line 6, and asked
why there was a three-year period as opposed to a single year.
MS. SUTTON explained that when a tax credit was offered in 1986,
it was offered under the same scenario, with a basic five-year
plan, three years during which a tax credit could be applied for
and received. This bill is modeled largely after that concept.
She related that Senator Ben Stevens believes this should be
offered for a longer period of time. She noted that the
committee packet includes a report relative to the successes
under the previous bill, which was issued under the Cooper
Administration. Ms. Sutton explained that the equipment that is
purchased has to be placed into service and actually used to
produce value-added salmon. The hope is that they will be
encouraged to continue in that operation, increase production,
and have the tax credit available for a period of time.
Number 1696
REPRESENTATIVE SAMUELS asked how the tax currently works, and
what the thoughts are of the local communities.
MS. SUTTON explained that the "raw fish tax" works by being
shared, with 50 percent staying with the state general fund and
50 percent going out to municipalities, boroughs, or cities.
The communities feel strongly that they should receive their
full 50 percent share of that revenue, she related. This has
been an issue in the legislature for a number of years. She
noted that through testimony received and the workings of the
Task Force, coastal communities have strongly expressed that
they must be held harmless in terms of that share.
REPRESENTATIVE SAMUELS asked if, with the tax credit, they would
now be getting two-thirds or three-quarters of the money.
MS. SUTTON answered that the state will bear the burden of
whatever tax credit there is. When the tax is calculated, it
will be calculated as if there is no tax credit for the
municipalities.
Number 1814
CHAIR SEATON posed a situation in which everyone applied for
their maximum [tax credit]. He asked if, in such a situation,
the state would receive no salmon raw fish tax while the city
and municipalities would still receive their 50 percent share.
He related his understanding that if all the processors applied
for their maximum, they could apply for 50 percent of the raw
fish tax and therefore 50 percent is what the state's (indisc.)
and the other 50 percent would still go to the municipalities.
He characterized that as a worst-case scenario and a hit on the
state's budget. He asked if his understanding was correct.
MS. SUTTON said she did not believe, under any scenario, that
the state would have zero tax revenue from the fisheries
business tax.
REPRESENTATIVE WILSON related her understanding that the
municipalities' share will remain the same.
MS. SUTTON said that is correct and noted that [the
municipalities' share] will be held harmless.
REPRESENTATIVE BERKOWITZ noted that he is still trying to
understand how this works. He asked whether the processors pay
the tax.
MS. SUTTON answered in the affirmative.
REPRESENTATIVE BERKOWITZ asked if the fishermen pay the tax. He
also asked if the same fish are being taxed twice.
MS. SUTTON replied that the same fish aren't being taxed twice.
Whether or not the fishermen pay the tax, the money comes from
somewhere, she said.
REPRESENTATIVE BERKOWITZ related his understanding that the
fishermen don't file a tax return, while the processors do.
MS. SUTTON replied yes.
REPRESENTATIVE BERKOWITZ inquired as to the number of processors
that file this tax.
MS. SUTTON deferred to the Department of Revenue representative.
Number 1939
CHAIR SEATON highlighted that the Department of Revenue had
[expressed the need] to distinguish between the facility being
taxed and the taxpayer. He pointed out that the fish processed
in an area may not be where the value-added section goes, which
he believes is related to whether the tax credit should go to
the taxpayer as a general entity or to a specific entity. It
appears that the proposed CS has [utilized] the taxpayer and not
the facility. He inquired as to the reasoning behind that.
MS. SUTTON remarked that this is a confusing issue. She said
that she spent a considerable amount of time with George
Utermohle, Legislative Legal and Research Services, with regard
to the recommendations attached to the Department of Revenue's
fiscal note. [Legislative Legal and Research Services] believes
that [the state] is capturing what is necessary and providing
the best mechanism, which is incorporated in the proposed CS.
However, she noted that the Department of Revenue may still have
some concerns because the proposed CS came out early this
morning. Ms. Sutton mentioned that this is a policy call.
Number 2135
REPRESENTATIVE SAMUELS asked if the valuation of the equipment
is going to be set in regulation. He also asked if there is a
definition for "predominantly", which is located on page 2, line
22. He pointed out that an individual could sell equipment to
his/her partner or spouse.
MS. SUTTON acknowledged the tendency toward corruption that is
inherent in human nature, and explained that the legislation has
been tightened as much as possible without making it too
onerous. She recalled that the Department of Revenue has a very
ardent checklist and process for reviewing these types of
purchases. With regard to the language "predominantly", Ms.
Sutton said that was the department's choice because the
department believes "predominantly" is a strong word with a
definition that means more than half, perhaps even considerably
more than half.
Number 2283
REPRESENTATIVE BERKOWITZ directed attention to the word "or" on
page 1, line 11. He said it wasn't clear to him how to read
"tax credit" in this provision. He related his understanding
that one can't claim more than 50 percent of the liability.
However, it isn't clear whether that restriction is curtailed
after December 31 [2005]. He pointed out that "or" is normally
construed as conjunctive; however, the language doesn't make
sense that way.
CHAIR SEATON suggested Representative Berkowitz's concern would
be corrected by replacing "or" with "and".
REPRESENTATIVE BERKOWITZ replied that he didn't believe the
intent was for "and" language because inserting "and" seems to
create a situation in which an individual can't claim [the tax
credit] after December 31 [2005] regardless.
CHAIR SEATON confirmed that Representative Berkowitz's reading
with the "and" would be correct. [The intent] was that this
[tax credit] would only apply to property placed in service
before December 31, 2005, he said.
REPRESENTATIVE BERKOWITZ related his understanding that the
[intent] was to look back and [allow the tax credit] for
investments that might be made this year or next year.
CHAIR SEATON agreed. He noted that he was unsure about this
because the legislation says that [the tax credit] can't be used
for property placed in service after 2005, and yet there is a
three-year carry-forward period to apply to equipment. He
questioned how one could carry forward a tax credit and not be
able to use the tax credit because the equipment is going to be
placed in service after [December 31, 2005]. Chair Seaton noted
that the proposed CS was received at the last moment and thus
wouldn't be forwarded from committee today.
Number 2510
REPRESENTATIVE SAMUELS asked whom this legislation is aimed at.
MS. SUTTON answered that it targets anyone who wants to do
value-added salmon. She noted the hope to encourage new folks
in the business. She explained that the language "on a vessel"
is included because it clarifies that the [fisheries business
tax] would apply to both shore-based [facilities] and vessels in
state waters. The "on a vessel" language was requested by the
Department of Revenue in order to provide clarity.
CHAIR SEATON asked if this would apply in a situation in which a
processor paying taxes in Alaska places value-added machinery in
a plant in Portland, Oregon.
MS. SUTTON clarified that the tax credit is actually on the
property. She deferred to the Department of Revenue with regard
to how and when the tax credit applies. She offered that the
tax credit is on the property first placed into service.
CHAIR SEATON asked if that [property] could be within or outside
of Alaska.
MS. SUTTON answered that it [is on property] within Alaska.
Number 2680
REPRESENTATIVE BERKOWITZ pointed out that distinctions are not
being made regarding the processing of different species. "For
example, if they're getting reds [sockeye salmon] here and pinks
[humpback salmon] somewhere else, by far the greater value would
come from Alaska," he said. "And yet we'd be shorted."
Representative Berkowitz posed the following:
The numerator ... is the weight of raw salmon
processed on the vessel by the taxpayer in Alaska.
Lets assume that's all reds. And the denominator is
the weight of raw salmon processed on the vessel in
and out of Alaska; so it's the reds in Alaska plus the
pinks that they're getting somewhere else. So,
they're getting a tax credit for processing outside
pinks based on weight, but, in terms of value, the
bulk of value is coming from Alaskan waters.
MS. SUTTON said although she didn't believe the aforementioned
assessment to be correct, she would prefer that Mr. Harlamert
speak to it.
Number 2745
CHUCK HARLAMERT, Juneau Section Chief, Tax Division, Department
of Revenue, began by reviewing the fiscal note and the portions
that still apply to Version D. He estimated that the level of
investment that the credit would generate is roughly $9.8
million, which would generate a credit of $4.9 million over five
years. He emphasized that the aforementioned is a very rough
estimate that assumes the use of the credit ramps up over the
three years of its life, similar to that for the previous
credit.
MR. HARLAMERT, in response to Chair Seaton, related that the
department projects that in fiscal year 2004, $5.6 million in
raw fish tax from salmon will be collected. The tax credit is
expected to ramp up to $2.8 million in the third year. The
assumption used was that there would be a low threshold up front
that would double each year until the cap is reached. In
further response to Chair Seaton, Mr. Harlamert confirmed that
the $5.6 million is the total raw fish tax, not the state's
portion.
CHAIR SEATON related his understanding, then, that the state's
portion would be $2.8 million and the department is estimating
that during the ramp up years the estimation is that there will
be a full $2.8 million tax credit. Therefore, the state would
receive very little.
MR. HARLAMERT informed the committee that it won't reach the
full half, although in theory it could increase to higher than
half. Mr. Harlamert confirmed that the $2.8 million is an
estimate of the maximum liability. He said it was more likely
that it would be more in the first years and then level out in
the third year.
MR. HARLAMERT highlighted that the Department of Revenue had
concern with regard to whether the [legislation] is
intentionally addressing taxpayers versus the facility. The
fisheries business tax applies at the location level and thus
every plant is its own taxpayer. However, one taxpayer can own
many plants or vessels. He expressed the need for the committee
to keep the aforementioned in mind with regard to the
intentions. He asked if the intent is for a taxpayer to be able
to offset taxes from one location against credits generated by
another. The aforementioned would be desirable if one wants to
maximize use of the credit. However, the only consequence may
be the generation of effective differences between large
taxpayers who can do the aforementioned and small taxpayers who
don't have the opportunity to offset tax from one plant against
credit generated by another. "It's simply a matter of whether
you'd rather keep it narrow or expand the ... amount of the
credit that gets used," he said.
CHAIR SEATON asked if Version D allows for each facility to
obtain a tax credit on its facility without allowing it to be
aggregated across the state.
TAPE 03-10, SIDE B
CHAIR SEATON asked if Wards Cove [Packing Company], which is no
longer in existence, would be able to receive a tax credit from
all of its operations and apply that in one area.
MR. HARLAMERT interpreted Version D to mean that Wards Cove is
the taxpayer and that its credit and the limitation on that
credit would be calculated based upon all of its activities in
the state.
CHAIR SEATON posed a scenario in which the committee wanted to
change that and asked if that required language such as
"taxpayer facility".
MR. HARLAMERT indicated language such as "licensed facility"
could be inserted, although that would seriously restrict the
use of the credit. Mr. Harlamert said that he thought that the
drafters addressed that issue "and decided to retain up front
overall the taxpayer view of looking at the taxpayer as the
company so that you can offset those liabilities." Mr.
Harlamert related that the taxes that can be offset with this
credit include taxes on fish that is exported from the state
unprocessed. If the intent is to maximize the use of the
credit, that would be appropriate. However, the counter-effect
is that it seems to be a backdoor way of supporting exporting
salmon unprocessed.
MR. HARLAMERT highlighted [the department's] recommendation to
specify the order in which credits are taken. He explained that
there can be confusion with regard to which credit has priority
when there is interaction between different credits as well as
within a single credit. The credit priority affects how much
credit is eventually taken. Mr. Harlamert said he presumed that
the intent of HB 90 is to maximize the portion of earned credit
that is actually used against tax. If that's the goal, he
recommended inserting language that says "you use the credits on
a first generated, first use basis." Therefore, there won't be
a question with regard to whether credit generated in year one
gets used if in subsequent years there are continuing
limitations. However, if credits are generated every year, that
credit may never get used and may die before there is an
available tax to use it against. Mr. Harlamert summarized,
then, that it's important to specify the flow of credits.
Number 2843
CHAIR SEATON asked if [specifying the flow of credits] would
matter because this legislation sunsets any investment after
December 2005. He asked if it would be an ongoing credit.
MR. HARLAMERT answered that it would continue to matter because
credits can't be generated for an investment after December 31,
2005. However, any credits generated prior to that time can be
used in the three years subsequent to the year in which the
credit was generated. Therefore, there will be credits that are
applied against tax as late as 2008.
Number 2786
MR. HARLAMERT turned to the restriction on generating credits in
a year in which one is delinquent on taxes. The [division]
generally favors the aforementioned restriction because it seems
reasonable to expect that one would be up to date on his/her
taxes when that individual receives a credit. He related that
the language in the proposed CS is marginally effective because
one could, in theory, pay delinquent taxes at the last minute
and not provide the money with the return and still receive a
credit. In a year when an individual has excess credits or
carryover credits that aren't received because the individual
was delinquent, those credits would carryover to the next year
in which the individual is hopefully current. Therefore, in
order to make the delinquency provision more effective, the
language could specify that those [carryover] credits would be
used in the year [the individual is delinquent] as if those
credits had been taken. He noted that the division would prefer
that [this provision] take a taxpayer view.
MR. HARLAMERT moved on to the qualifications for the property
and noted that the proposed CS includes the word
"predominantly". He highlighted the need to decide how one
determines predominant. He explained that generally predominant
refers to over 50 percent, but the question arose with regard to
whether [the 50 percent] was in reference to value or weight.
Mr. Harlamert stated that it's not necessarily practical for the
division to develop good regulations for this three-year credit
because by the time regulations are developed, the credit will
be half over. Furthermore, it would be best, he said, to [put
in place the regulations] now, especially due to the
retroactivity of this credit. Mr. Harlamert pointed out that
use of the word "predominantly" helps, although it doesn't
necessarily accomplish what's necessary unless there is a
definition of "value-added salmon products" or "value-added
salmon processing".
Number 2611
CHAIR SEATON asked if the list in the legislation needs to be
totally inclusive.
MR. HARLAMERT explained that the list is a list of machines and
processes that, in many cases, are common to any processing of
any species and value-added [product]. Therefore, there will
have to be a judgment call as to whether this machine or
investment truly is value-added and thus he said he felt that
there should be an indication of legislative intent, that is a
definition of "value-added." He expressed his belief that a
credit should be closely targeted to the desired result.
MR. HARLAMERT identified the [division's] next recommendation as
a recapture or "claw-back" provision. He pointed out that most
investment-type credits have claw-back provisions that basically
uphold the taxpayer's end of the contract. [The state] is
buying 50 percent of the individual's machinery with the
expectation that the individual uses the machinery for the
purpose [that the state] wants to provide an incentive.
Therefore, it isn't unreasonable to ask that the individual
continue that purpose for a reasonable time in exchange for [the
state's] paying for half of the individual's assets. As the
legislation is currently written, an individual could put a
machine in place, run one salmon through it, call it value-
added, and sell; thus the machine would technically qualify for
full credit, even if the individual takes the machine to
Seattle, Washington, the next year. Therefore, [the division]
suggests that the machine be required to remain in the state and
be used for value-added salmon processing for a specified period
of time.
CHAIR SEATON asked if the equipment remaining in the state would
pose an interstate commerce problem.
MR. HARLAMERT replied yes and no. There are legal theorists
that believe any state tax credit, on its face, has a
constitutional problem because it violates the basic prohibition
against treating in-state activity differently from out-of-state
activity. As a practical matter, no one has ever complained.
Therefore, it's a good idea to have the protective language in
Section 4 of the legislation.
CHAIR SEATON requested that Mr. Harlamert rewrite his written
comments based on the proposed CS.
Number 2315
BUCK LAUKITIS, President, North Pacific Fishing Association,
testified in support of the incentive concept. He explained
that most of the members of the association have concerns with
regard to who will pay the portion of the tax incentive.
However, he acknowledged that he understood, from today's
discussion, that the state would bear the entire burden for the
tax credit. The only way the North Pacific Fishing Association
would support HB 90 is if the aforementioned is the case. He
pointed out that in many coastal areas the primary source of
revenue for municipalities and boroughs is the ex-vessel fish
price and the landing tax. Although some boroughs have property
taxes that may partially offset some of the lost revenue, many
boroughs do not and are almost entirely dependent upon the raw
fish taxes for revenue. With regard to who actually pays the
raw fish tax, Mr. Laukitis related his belief that the fisherman
pays the tax, while the processors merely collect the tax and
file with the state.
MR. LAUKITIS asked whether value-added processing eventually
results in higher ex-vessel prices, or is this merely a function
of higher wholesale prices [and] secondary sales. He also asked
if the [higher ex-vessel prices] would only be accrued to the
processor, not to the fisherman. Mr. Laukitis related that [the
North Pacific Fishing Association] would like to believe that
adding incentives would result in higher ex-vessel [prices]
because that helps the communities and ultimately fishermen. He
asked whether processors buying value-added equipment with
capital would take all the money in the end or whether it would
be shared at the ex-vessel level. Mr. Laukitis concluded by
reiterating that the association supports the incentive concept,
although the association has some questions because it didn't
have the opportunity to review the proposed CS.
Number 2081
CHRIS GARCIA, Cook Inlet Fisherman's Fund, related his belief
that the Cook Inlet Fisherman's Fund is in favor of the intent
of the legislation. He said that he hoped that the intent of
this legislation isn't merely to increase the profit for
existing large processors, but also to encourage smaller, new
operations to come into existence in order to increase the value
of salmon throughout the state. Mr. Garcia directed attention
to page 2, line 18, of Version D, which defines "new property".
He recalled that there was some concern with that, which he
shared. He suggested that the language could be changed to read
"used by another person under this tax credit". He explained
that a small operation that wants to get started in smoking fish
may need to buy used equipment in order to be financially
involved. Therefore, if an individual is allowed to [purchase]
equipment in the state that has never been used under this tax
credit, it might benefit everyone involved to allow that. Mr.
Garcia expressed the need to review the final draft of this
legislation in order to [formulate an opinion] because although
he agreed with the intent, he wasn't sure of all the fine
points.
CHAIR SEATON agreed to review the definition of "new property"
and "qualified investment" and mentioned that there is concern
with swapping equipment [and how that would fall under the
definition of "new property"].
Number 1877
NORMAN COHEN, Attorney at Law, Bering Sea Fisherman's
Association, testified in support of this legislation because
value-added processing is extremely important for the future of
Western Alaska fisheries. Equipment to produce value-added
products costs a lot of money. Therefore, for marginal fishers
in Western Alaska, help in obtaining the equipment to do value-
added [processing] and compete in the marketplace would be of
great assistance. He concluded by noting support of the intent
of the legislation and hoped that the issues mentioned could be
worked out.
CHAIR SEATON asked if the Bering Sea Fisherman's Association has
any opinion on the taxpaying entity. He asked if the
association wants the tax credits to be applied on a facility
basis.
MR. COHEN said the Bering Sea Fisherman's Association hasn't
discussed that at all.
CHAIR SEATON requested that all [interested parties] provide
input with regard to whether the desire is to maximize the tax
credit or provide it for individual plants. After determining
that no one else wished to testify, Chair Seaton announced that
HB 90 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Fisheries meeting was adjourned at
9:45 a.m.
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