HOUSE BILL NO. 154 An Act relating to security for the payment of fishery business taxes and to payment of estimated fisheries resource landing taxes and penalties. REPRESENTATIVE DREW SCALZI, stated that in recent years, the fishing industry has seen the development of fish "brokers" who like e-commerce businesses, facilitate or broker interstate commerce between parties without actually handling the product. Because the brokers export the product, they are subject to the fisheries business tax. However, some businesses may have a small working capital and may not possess "real" property of lien-able value against which a tax may be collected, should the business default. Presently, absent a lien-able value of property equal to three times the amount of the estimated tax, a surety bond must be paid equal to twice the estimated amount of the tax. He commented that the cost of the bond is a burden to a company operating on a small margin. Representative Scalzi maintained that the bill would amend the statutes by offering an additional option so that applicants may avoid posting a bond for twice the amount of the estimated taxes if the business: · Remits all tax obligations on a monthly basis by th paying the taxes due on or before the 15 day of the month following the month in which the tax liability was incurred; · Files a bond in the amount of $50,000; or · Provides the Department with proof that the applicant is the owner of lien-able real property in the State of a value of at least $100,000 dollars. Representative Scalzi stated that the bill would reduce the operating costs of fish broker businesses, facilitates competition and increased markets for fishermen, while ensuring a measure of security for fish business taxes. Representative Lancaster inquired how many applicants would be affected. Representative Scalzi estimated that three business would be affected. He enumerated that there are two or three in the halibut and sablefish market alone in the Homer and Seward area that would be affected. He suspected that there would be many smaller operators that the legislation would not affect. Representative Croft asked the difference between Sections 1, 2 & 3. Representative Scalzi did not know, however, th noted that they do cite the 15 of each month, taken the Administrative Code. Representative Croft commented that each appears to be a different type of fish tax. Vice-Chair Bunde questioned if the proposed legislation would fall under "special interest" legislation. Representative Scalzi acknowledged that the legislation would pertain to a small group of "entrepreneurs". He emphasized that area of business is new and growing and should be encouraged. NEAL SLOTNICK, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE, offered to answer questions of the Committee. CHUCK HALAMERT, SECTION CHIEF, TAX DIVISION, DEPARTMENT OF REVENUE, referenced that Section C was the alternate methodology for the security for that type of fisheries business. It tends to mimic the existing security with one additional option. Representative Croft requested taxes be identified from Sections 1-3. Mr. Halamert replied that AS 16.51 is the Seafood Marketing tax in the amount of .3%. He continued, AS 43.76 is part of the Salmon tax, and AS 43.77.020 is the landing tax. Representative Croft noted that AS 43.77 contained both the tax component and the amount that needed to be collected. Mr. Halamert agreed. He noted that some are paid and some are collected. Representative Scalzi added that under the Individual Fishery Quota (IFQ) system, the fisherman cannot be a direct fish seller without proper authorization from the National Marine Fisheries Service. Representative Lancaster MOVED to report CS HB 154 (FSH) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Davies asked who would be excluded in the reference on the bottom of Page 2. Mr. Halamert explained that language was used to prevent an existing taxpayer from establishing an existing company and obtaining a license to buy fish. There being NO OBJECTION, it was so ordered. CS HB 154 (FSH) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by Department of Revenue dated 3/22/01.