Legislature(2003 - 2004)
05/09/2003 03:37 PM Senate RES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
HB 104-PAYMENT OF FISHERY BUSINESS TAX
SENATOR GARY STEVENS, sponsor of HB 104, told members that HB
104 recognizes the enormous problems faced by the salmon
industry over the last few years due to competition from the
farmed fish industry. This legislation is a priority of the
Salmon Industry Task Force. HB 104 would primarily affect
smaller processors, probably fewer than a dozen. Under current
law, property value must equal three times the amount of the
estimated tax or a bond must be posted equal to twice the
estimated tax. All taxes must be paid by April 1. HB 104 allows
for a monthly tax payment, $50,000 bond, or $100,000 in lienable
property. It provides an attractive option to small processors
to expand their processing operations. This legislation will
probably not create a savings to those processors because it is
more costly to pay taxes on a monthly basis. However, it will
attract new businesses into the salmon processing industry.
CHAIR OGAN questioned whether a similar version of this bill has
been before the committee.
SENATOR WAGONER reminded Chair Ogan that the committee heard a
bill that offered a 50 percent investment tax credit.
SENATOR GARY STEVENS clarified that this legislation is geared
toward the smaller processors.
CHAIR OGAN asked if DOR is concerned that this bill might result
in a loss in revenue because some of the marginally capitalized
processors might have a difficult time making payments.
MR. CHUCK HARLAMERT, Tax Division, Department of Revenue (DOR),
replied:
... we can reasonably expect that the bill will be
attractive to processors who are thinly capitalized
because it is, in the end, in terms of your cost of
capital, the most expensive security option available
or there are many cheaper options available. So you
would expect folks who are inherently less able to pay
to elect it and so the likelihood of loss is more than
your average taxpayer perhaps. A 15-day payment period
does help mitigate that as long as we can keep our
tabs on those folks so hopefully we can limit our
losses.
CHAIR OGAN asked if the bill will require more staff time to
process monthly payments.
MR. HARLAMERT said the payments are not that difficult to
process. However, monitoring non-payments and dealing with
delinquent accounts in short order may be more time consuming.
SENATOR SEEKINS asked how many of the businesses that will be
affected by this legislation are resident owned.
MR. HARLAMERT said he does not have that information. He said
this will not apply to the large, established taxpayers or the
very small catcher-processor businesses. It will apply to the
mid-range processor who pays around $100,000 to $300,000 per
year in fisheries business taxes. Some of those are [owned by]
non-residents.
SENATOR SEEKINS asked if a non-resident would be less likely to
have lienable real property in the state.
MR. HARLAMERT said many non-residents own their processing
facilities outright.
SENATOR SEEKINS said he does not mind giving a break to someone
who lives here, but he does not like giving a break to a
business that lives off of our resources and is owned by an out-
of-state resident.
CHAIR OGAN reminded members the Interstate Commerce Clause
prevents discrimination based on residency.
SENATOR SEEKINS said he was thinking that he would trust a
person with lienable property in Alaska more than he would trust
a person without lienable property in Alaska.
CHAIR OGAN noted the bill requires $50,000 in cash for those
without lienable property.
There being no further testimony or questions, SENATOR DYSON
moved CSHB 104(FSH) from committee with individual
recommendations and its attached fiscal notes.
CHAIR OGAN noted that without objection, the motion carried.
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