Legislature(1993 - 1994)
04/13/1993 08:30 AM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 275
"An Act relating to salmon marketing, a salmon
marketing tax, and the Alaska Seafood Marketing
Institute; and providing for an effective date."
REPRESENTATIVE BILL HUDSON explained that HB 275 would
impose a 1 percent salmon marketing tax on all salmon
harvested in Alaskan waters. He emphasized that although
the fishing community is not in complete support of the
increased tax there seems to be a consensus that an
increased, expanded and more aggressive marketing system is
needed. He stressed that farmed salmon production has
increased. He discussed salmon varieties.
Representative Hudson noted that HB 275 changes the Alaska
Seafood Marketing Institute Board's composition. Under HB
275 the Board would consist of 12 fishermen and 12
processors. He asserted that HB 275 creates a new emphasize
on world marketing.
Representative Hudson observed that there is a Raw Fish Tax
assessment. He added that fishermen pay a Salmon
Enhancement Tax of one to three percent. He noted that
there has been a request by seiners to allow a reduction of
their Salmon Enhancement Tax from 3 to 2 percent.
Representative Hudson stated that the 1 percent tax on all
permit holders would generate $5.7 million dollars. He
provided members with Work Draft, 8-LSO341\R (Attachment 1).
He discussed provisions of HB 275 as provided in a sectional
analysis by Legal Counsel, dated April 8, 1993 (Attachment
2). He review changes by the work draft (Attachment 3). He
reviewed back-up materials provided to members (copies on
file).
PAUL DICK, DEPARTMENT OF REVENUE emphasized that the
Department of Revenue anticipates that $5.75 million dollars
will be collected from the 1 percent tax. He added that the
collection program would be similar to the Salmon
Enhancement Tax which the Department of Revenue already
collects.
Representative Martin asked why the Department of Revenue
needs new positions.
(Tape Change, HFC 93-102, Side 2)
Mr. Dick explained that the Department has requested
positions for data entry and preliminary examinations. He
stated that no new audit positions are requested.
Mr. Dick clarified, in response to a question from
Representative Hanley, that the Salmon Enhancement Tax is
provided for in AS 43.76. He added that HB 275 would add a
new subsection. He explained that the Salmon Enhancement
Tax is a self imposed tax by limited entry permit holders.
Representative Hanley asked if members can vote to decrease
the tax. Mr. Dick thought that they could vote to increase
or decrease the tax.
KATE TROLL, SOUTHEAST ALASKA SEINERS (SEAS) stated that SEAS
does not support the one percent tax. She felt that seiners
cannot afford an additional 1 percent. She observed that an
average seiner skipper nets $11,000. She maintained that
the tax represents 8 - 10 percent of the net. She asserted
that the seiner fleet is struggling. She stressed that some
boats could be tied up if the tax is added.
Ms. Troll was in support of the marketing aspect of HB 275.
She discussed the possibility of decreasing their Salmon
Enhancement Tax. She maintained that permit holders would
have to be a vote to terminate the tax and then hold a new
vote to establish a tax at the lower level. She stressed
that if marketing works for the fishermen that it will also
work for the aquaculture associations. She asserted that
hatchery programs will recoup their immediate loss in
revenues.
Ms. Troll suggested an amendment to allow the Commissioner
of Department of Commerce and Economic Development to
guarantee loan collateration (Attachment 4).
Representative Martin noted that other tax increases to
fishermen will result in an over all tax increase of 16
percent. Ms. Troll added that the tax paid by processors is
passed on to the fishermen.
Ms. Troll clarified, in response to a question from
Representative Martin, parity of the Board is the primary
concern of fishermen, in regards to the Board's make-up.
KIM ELTON, DIRECTOR, ALASKA SEAFOOD MARKETING INSTITUTE
(ASMI) spoke in support of HB 275. He anticipated that the
bill would have resulted in revenues of:
* $3.1 million dollars in 1991 and;
* $5.75 million dollars in 1992.
Mr. Elton estimated 1993 revenues at $3 - $5.5 million
dollars. He noted that an average of $400 hundred dollars
would be paid by a harvester grossing $40,000 thousand
dollar. Revenues will be used to supplement processing
revenue. The 1 percent tax will be used in the domestic
market exclusively for salmon. He noted that section 5
provides that marketing data will be provided to fishermen
groups. He added that ASMI will provide information to all
groups.
Representative Brown asked if the 1 percent tax would
displace currently used general fund dollars or be an
increase of the current level of state support. Mr. Elton
stated that he envisioned that general fund dollars would be
supplemented rather than supplanted. He stressed that the
fishery resource is owned and managed by the state. He felt
that there is a state obligation to participate in the joint
marketing of the common resources.
Representative Brown noted that there is no insurance that
additional funds will be appropriated. She asked if the tax
would be collected once. Mr. Elton thought that it would be
collected only once. Representative Brown expressed concern
that that processors would have to pay the tax when fish are
transferred a second time. Mr. Dick stated that the tax
would only be collected once. He felt that the legislation
would be clear as to the collection of the tax. Members
further discussed the tax collection process.
JERRY MCCUNE, PRESIDENT, UNITED FISHERMEN OF ALASKA (UFA)
clarified that only individuals can own a permit. He stated
that floaters that freeze fish on board and leave the state
would still be responsible to pay the tax. He observed that
the Enhancement Tax is collected the same way.
DEAN PADDOCK, BRISTOL BAY DRIFTNETTERS ASSOCIATION spoke in
of HB 275. He stressed that fishermen are willing to put
money in support of marketing. He reviewed taxes paid by
Bristol Bay fishermen. He concluded that they pay 10
percent in tax. He felt that the 1 percent tax for
marketing would do more good than all the other taxes. He
noted the affect of Russian and farmed salmon on the market.
He emphasized that the Raw Fish Tax is collected from the
processors but paid by the fishermen. He indicated that
markets need to be expanded. He stressed that if fishermen
are going to pay they want to play an important role in
deciding how the money they contribute will be spent.
Mr. McCune stressed that UFA is split on the legislation.
Representative Hudson recommended that the amendment
suggested by SEAS be considered. Representative Hudson
added that the effective dates of section 8 and 9 of the
work draft should be changed to 1998 and 1999 respectively.
Representative Hanley MOVED to ADOPT Work Draft, 8-LSO341\R.
There being NO OBJECTION, it was so ordered.
Representative Hanley MOVED to delete "1999" on page 6, line
3 and insert "1998"; and to delete "2000" on page 6, line 7
and insert "1999". There being NO OBJECTION, it was so
ordered.
Representative Hanley discussed the amendment proposed by
SEAS. He felt that further drafting was needed.
Representative Brown MOVED to insert "to the public" on page
3, line 30. There being NO OBJECTION, it was so ordered.
CSHB 275 (FIN) was held in committee. Representative Hanley
noted that he is a fishermen.
ADJOURNMENT
The meeting adjourned at 10:00 a.m.
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