HOUSE BILL NO. 264 1 "An Act providing for a fishery resource landing tax; and providing for an effective date." HB 264 was held in a subcommittee consisting of Chair Parnell with members Representatives Navarre, Hoffman, Therriault and Foster. Representative Parnell provided members with a Committee Substitute for HB 264 (FIN), Work Draft, 8-LS0941\X (Attachment 1). MOLLY MCCAMMON, STAFF, REPRESENTATIVE MOSES explained amendments adopted in the work draft. She compared the work draft to CSHB 264 (FSH): * Page 2, lines 7-11, credit for taxes paid in other states was expanded to other jurisdictions. Taxes equivalent in nature would be credited. Foreign taxes could be credited. * Page 3, line 12, clarifies that the credit is only given on the portion of the harvest caught under the CDQ. * Language was added to clarified that tax credit would be given on contributions to non profit for use "in the state." * Page 6, line 9, clarified the definition of "value". Ms. McCammon noted that amendment A, by Representative Martin was not adopted by the Subcommittee (Attachment 2). She discussed amendment A. She stated that the Department of Community and Regional Affairs felt that the amendment was redundant. She added that Amendment B, by Representative Brown was not adopted by the Subcommittee (Attachment 3). She discussed amendment 3. She stated that the amendment would have suspended collection of the tax at the request of a municipality. The Subcommittee concluded that there is no way of adding a local option without inclusion of other taxes, such as the Raw Fish Tax. Representative Parnell MOVED to ADOPT, Work Draft, 8- LS0941\X, Committee Substitute for HB 264 (FIN). There being NO OBJECTION, it was so ordered. Ms. McCammon explained, in response to a question by Co- Chair MacLean, that section page 6, line 20 - 26 reflects current statutes regarding the Fisheries Business Tax. Harvest that is not contributed to a municipality will be distributed according to a demonstration of community impact. 2 Co-Chair MacLean referred to page 2, lines 7 - 11. She asked how foreign currency exchange would be calculated. Ms. McCammon clarified, in response to a question by Representative Parnell, that the CSHB 264 (FIN) would not affect the previously adopted fiscal notes. CARL MEYER, DEPARTMENT OF REVENUE explained that equivalent taxes paid in foreign countries would be calculated based on the average annual rate of the equivalent tax paid. Representative Brown asked the definition of equivalent in nature. Mr. Meyer explained that page 2, line 9 refers to taxes similar to the Fisheries Business Tax or the Salmon Enhancement Tax. Taxes imposed on the processing of the resources in a foreign country would be credited. Import/export duty or taxes and sales taxes would not be credited. Representative Navarre expressed concern that the legislation does not clearly state that the tax credit will only given on the portion of the harvest shared to municipalities. Ms. McCammon provided members with a chart demonstrating the formula for assessing the tax credit (Attachment 4). Mr. Meyer explained attachment 4. Representative Navarre agreed that the intent is that the tax credit be given only on the portion shared to municipalities. He questioned whether language in page 3, section 43.77.050 clearly stated the intention of the Committee and sponsor. Co-Chair Larson asked if the person applying for the credit could be the beneficiary of the use of the contribution. Ms. McCammon explained that the legislation did not prevent the processor from creating a nonprofit organization. She noted that the processor's harvest would be under contract to the CDQ community. If the CDQ community is unhappy with the processor's tax credit contribution arrangement it is unlikely that they will elect to grant the processor a contract for future harvests. Representative Navarre MOVED to ADOPT a conceptional amendment to be drafted by legal counsel to assure that "the credit is only against the amount that is to be shared back with the community." Co-Chair Larson restated the motion to say that, "the tax credit is only given toward the portion that would go to the local government, not the state portion." Representative Parnell pointed out that the Department of Revenue testified that the intent is implicit in the 3 legislation. He noted that the amendment would make the intent explicit in statute. There being NO OBJECTION, it was so ordered. Representative Parnell MOVED to report CSHB 264 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 264 (FIN) was reported out of Committee with a "no recommendation" and with a fiscal impact note by the Department of Commerce and Economic Development, dated 4/13/93 and with a fiscal impact note by the Department of Revenue, dated 4/13/93.