HB 154-FISHERY BUS. TAX/FISHERIES RES. LAND. TAX                                                                   
                                                                                                                              
CHAIRMAN TORGERSON announced HB 154 to be up for consideration.                                                                 
                                                                                                                                
REPRESENTATIVE  SCALZI, prime sponsor,  said the fisheries  business                                                            
tax is set  up so that  processors will collect  the tax during  the                                                            
year, hold  it and pay it to the state  on April 1 of the  following                                                            
year. He explained:                                                                                                             
                                                                                                                                
     They're  allowed to hold  that tax so  they can pay  their                                                                 
     fishermen and sell their  pack before they are financially                                                                 
     solvent.  In doing so, they give  a security to the  state                                                                 
     of Alaska  of either  three times the  amount of lienable                                                                  
     property  in the amount of taxes  they collected the  year                                                                 
     before  or a  bond in  that amount.  This works  fine  for                                                                 
     canneries  and large  processors  who have a  lot of  real                                                                 
     property as  assets, but after the advent of IFQs  we have                                                                 
     new  buyers -  a fish  processor  who operates  an option                                                                  
     block for  some type of quick sales of fish. In  doing so,                                                                 
     they generate  a lot of money  and a lot of raw fish  tax,                                                                 
     sometimes  in excess of half  million dollars. To do  this                                                                 
     under current  statutes, they have to bond for  that money                                                                 
     for  the next  year. Even  though they  haven't collected                                                                  
     any,  if they had a  half million dollars  worth of  taxes                                                                 
     collected the previous year,  they have to bond for half a                                                                 
     million  dollars  or  have  three  times  that  amount  in                                                                 
     lienable property, which would be $1.5 million.                                                                            
                                                                                                                                
     These  fish buyers don't  have that  kind of assets.  They                                                                 
     operate  with a computer,  an office,  a few cell phones.                                                                  
     They  operate on a very  small margin,  but they are  very                                                                 
     valuable  to the industry  right now.  We have produced  a                                                                 
     very high price for halibut  and sable fish since IFQs and                                                                 
     with the  long season we have,  they are very valuable  to                                                                 
     the  industry. When we  have higher  fish prices, we  also                                                                 
     have higher fisheries business tax.                                                                                        
                                                                                                                                
     I went  to the Department of  Revenue to see how we  could                                                                 
     make  this   work  and  they  were  very  cooperative   in                                                                 
     designing something that  they felt would secure the State                                                                 
     of Alaska,  which would be to  allow these fish buyers  to                                                                 
     pay their raw fish tax on  a 30-day allotment. So, if they                                                                 
     pay as they  go, the Department of Revenue has  no problem                                                                 
     with that.  For a bond, they will have to issue  a $50,000                                                                 
     bond or have $100,000 in lienable property.                                                                                
                                                                                                                                
MR. CHUCK HARLEMERT, Division of Tax, Department of Revenue (DOR),                                                              
supported HB 154.                                                                                                               
                                                                                                                                
CHAIRMAN  TORGERSON indicated  there were  no further questions  and                                                            
that he would hold the bill for a quorum.                                                                                       
                                                                                                                                
He announced an at-ease from 6:37 to 6:39 p.m.                                                                                  
         HB 154-FISHERY BUS. TAX/FISHERIES RES. LAND. TAX                                                                   
                                                                                                                                
CHAIRMAN  TORGERSON announced  that  a quorum was  present and  they                                                            
would take up HB 154.                                                                                                           
                                                                                                                                
SENATOR TAYLOR  moved to pass HB 154 from committee  with individual                                                            
recommendations. There were no objections and it was so ordered.