Legislature(2003 - 2004)
03/24/2004 01:39 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 444
An Act relating to direct marketing fisheries
businesses, to the fisheries business tax, and to
liability for payment of taxes and assessments on the
sale or transfer of fishery resources; and providing
for an effective date.
REPRESENTATIVE PEGGY WILSON explained that HB 444 is the
companion bill to Senator Stedman's SB 286. The House
Special Committee on Fisheries recommended the legislation.
It intends to encourage value-added processing and direct
marketing for local fishermen. It would lower their tax from
5% to 3% because the current tax structure discriminates
against small boat fishermen who process and market their
own catch directly. These fishermen are taxed at the same
rate as the large floating processors. The bill also
clarifies that the tax is to be charged on the wholesale and
not the retail value of the product.
IAN FISK, STAFF TO SENATOR BERT STEDMAN, explained that the
change in the tax rate from 5% to 3% for direct marketers
would bring the mainly Alaskan vessels into line with the
rate paid by the shore plants. He said that because the
vessels operate out of Alaskan communities where they spend
money to re-supply, it is felt to be the fair rate to tax
small businesses. Importantly, it changes the point of
taxation. Currently the processor pays the fisheries
business tax based on the grounds price, or the price the
fisherman receives on delivering to the dock. The direct
marketer's tax is assessed at the first point of sale
further down the supply chain, and it's often the retail
price or the second wholesale price. He pointed out that
it's a disincentive to add value to the resource.
Mr. Fisk explained that the bill rectifies the due dates for
all taxes that direct market businesses have to pay.
Currently the businesses pay the Fisheries Business Tax
collected no later than April 1 of the following year. A
salmon fisherman is responsible for the enhancement tax for
hatcheries and the salmon marketing assessments that are
currently collected monthly. This bill simplifies their
accounting and tax payment systems.
Mr. Fisk pointed out that the bill applies to vessels of 65
feet and less, and it conforms to one of the licenses from
the Department of Environmental Conservation. The bill
applies only to product caught and sold by the same
fisherman. In terms of fiscal impacts, the bill is revenue
neutral. He concluded that the bill would level the playing
field to enable small businesses to take advantage of direct
markets.
Representative Foster referred to the fiscal note and asked
whether the funding of the Tax Technician II position is $25
thousand. Mr. Fisk affirmed, and said that it will be $25
thousand in the first year because it will be the first year
the tax will be collected. It is not required to be a year-
round position. The position the Department is requesting is
reflected in the $50.2 figure. Representative Foster asked
if it would cost the state $50 thousand a year to save the
fishermen money. Mr. Fisk replied that the Department of
Revenue felt it would be needed to assure compliance with
the new law.
KEN DUCKETT, EXECUTIVE DIRECTOR, UNITED SOUTHEAST ALASKA
GILLNETTERS, VIA TELECONFERENCE, expressed strong support
for the bill. He said that the fishermen have experienced a
number of seasons of very low prices and they are working to
survive by attempting to add value to their catch. He felt
that this bill would facilitate that. He referenced their
letter of support (copy on file.)
BRENNON EAGLE, VIA TELECONFERENCE, WRANGELL, explained that
he has direct-marketed salmon, halibut and shrimp for 12
years. He expressed strong support for both parts of the
bill to define the value and lower the tax rate to put
fishermen on an equal footing with shore-based processors.
He expressed that this bill is part of the solution and it
is important to pass it this year to encourage this segment
of the industry.
KATHY HANSEN, EXECUTIVE DIRECTOR, SOUTHEAST ALASKA
FISHERMEN'S ALLIANCE, JUNEAU, stated that the Salmon
Industry Task Force has worked intensively on this
legislation during the past two years. It is a compromise
bill resulting from work with industry, processors and all
three agencies involved in direct marketing. She said that
it is a tightly woven compromise that had unanimous support
from the Salmon Industry Task Force, and it basically
involves tax parity and a better business environment for
small businesses.
HB 444 was heard and HELD in Committee for further
consideration.
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