01/31/1996 08:06 AM House RES

 HB 397 - FISH LANDING TAX/SEAFOOD MARKETING ASSESSMENT                      
                                                                               
 CO-CHAIRMAN WILLIAMS announced that the committee would hear from             
 the sponsor, Representative Alan Austerman, and the Department of             
 Revenue.  He stated his intention to move SSHB 397 from the House             
 Resources Committee and declared that CO-CHAIRMAN JOE GREEN would             
 chair the remainder of the meeting.                                           
                                                                               
 REPRESENTATIVE ALAN AUSTERMAN said two years ago, the legislature             
 passed the Fishery Resource Landing Tax which established a tax on            
 offshore fisheries which landed product in Alaska.  HB 397 was                
 introduced to clean up a problem area in the tax so that it will              
 not be challenged in court.                                                   
                                                                               
 REPRESENTATIVE AUSTERMAN continued, the American Factory Trawlers             
 Association filed action against the state after the landing tax              
 was passed.  He said the court remanded the case back to the state            
 asserting that the American Factory Trawlers Association had to go            
 through the state process of review on their tax claim before it              
 came to the court.  He said the original tax included .3 percent              
 for the Alaska Seafood Marketing Institute (ASMI), and HB 397                 
 separates the ASMI .3 percent tax from the 3.0 percent Fisheries              
 Business Tax.  He asked the Department of Revenue to explain the              
 technicalities.                                                               
                                                                               
 Number 290                                                                    
                                                                               
 BOB BARTHOLOMEW, Deputy Director, Income and Excise Tax Division,             
 Department of Revenue said HB 397 was introduced to strengthen the            
 Fishery Landing Tax implemented by the legislature in 1994 and,               
 subsequently, challenged in its first year.  He said the tax raised           
 $7 million in its first full year of collections; half of which is            
 shared with the communities where the fish are landed and the other           
 half goes into the general fund.  He said the Department of Revenue           
 supports HB 397 to strengthen existing statute. It has a zero                 
 fiscal note.                                                                  
                                                                               
 MR. BARTHOLOMEW said the bill does not change the program. HB 397             
 makes the Fishery Landing Tax which is essentially for the offshore           
 fishing fleet as close as we can get it to the Fisheries Business             
 Tax.  The intent is to match the two fisheries taxes and make it so           
 that all taxpayers are treated equally.                                       
                                                                               
 MR. BARTHOLOMEW identified changes in the legislation.  In HB 397,            
 the 3.3 percent landing tax which includes .3 percent for ASMI is             
 reestablished to a 3 percent landing tax with a separate .3 percent           
 seafood marketing assessment.  This separates the marketing                   
 assessment in statute and equalizes the landing tax and the shore-            
 based fisheries business tax.  A new section is added: Section 22.            
 AS 43.77.045 Fisheries Resources Landing Tax Education Credit which           
 adds to this tax the ability to take an education credit.                     
                                                                               
 Number 506                                                                    
                                                                               
 CO-CHAIRMAN GREEN asked if HB 397 addresses or circumvents the                
 problems with the trawlers association and similar plaintiffs.                
                                                                               
 MR. BARTHOLOMEW said the bill was introduced to meet the challenges           
 brought by the association, and any weaknesses in the tax.                    
                                                                               
 CO-CHAIRMAN GREEN asked if this fix will take care of any other               
 litigants.                                                                    
                                                                               
 MR. BARTHOLOMEW said the bill will take care of any challenges the            
 Department of Revenue is aware of.                                            
                                                                               
 Number 580                                                                    
                                                                               
 REPRESENTATIVE JOHN DAVIES asked explanation of the multiple                  
 changes to the language concerning the value paid being substituted           
 by seafood products "produced."                                               
                                                                               
 MR. BARTHOLOMEW said the Department of Revenue feels the intent is            
 exactly the same.  We are just clarifying the fact that if you do             
 not purchase the fish, you just catch it; the Department of Revenue           
 is going to call that "produced" and it should be subject to the              
 seafood marketing assessment.                                                 
                                                                               
 Number 711                                                                    
                                                                               
 CO-CHAIRMAN WILLIAMS noted the presence of Senator Bert Sharp.                
                                                                               
 Number 752                                                                    
                                                                               
 REPRESENTATIVE PETE KOTT said HB 397 is a good bill and it cleans             
 up the statutes.  He moved that SSHB 397 move from the Resources              
 Committee with individual recommendations with the attached zero              
 fiscal note.  Hearing no objections, it was so ordered.                       
                                                                               
 CO-CHAIRMAN WILLIAMS turned the gavel over to C0-CHAIRMAN GREEN.