CS FOR HOUSE BILL NO. 264(FIN): An Act levying and providing for the collection of and disposition of the proceeds of a fishery resource landing tax; and providing for an effective date. CO-CHAIR DRUE PEARCE announced that CSHB 264(FIN) was before the committee. She invited Charles Cole, Attorney General, Department of Law, to speak to the bill. CHARLES COLE said that he had been reading advance sheets for the Supreme Court. He described one case that he hoped would enable the committee to evaluate the constitutionality of the tax as set forth in CSHB 264(FIN). The case was ITEL Containers International Corp. petitioner vs. Joe Huddleston, Commissioner of Revenue, State of Tennessee. He felt the case was interesting because it involved a tax imposed by the state of Tennessee on containers which were delivered by lessees or their agents in many states, including Tennessee. In the course of the Supreme Court's opinion it said that the state rejected the argument that the tax created a substantial risk of international multiple taxation because the taxes were imposed on a discreet transaction, the transferred possession of cargo containers within Tennessee. So it did not risk multiple taxation or impede federal regulation or foreign trade. In CSHB 264(FIN) the proposed tax is also upon a discreet transaction which takes place entirely in the state of Alaska, the first landing of fish products. This Alaska tax is similar to the tax in the aforementioned case. In further describing the case, he said the Supreme Court, in the course of its opinion, said the state tax satisfied complete domestic commerce law tests "when the tax is applied to an activity and when a substantial nexus within the taxing state is fairly apportioned, does not discriminate against interstate commerce and is fairly related to the services provided by the state." The Supreme Court had no trouble in its opinion finding this Tennessee tax satisfied those four tests. It said, therefore, that there was a substantial nexus, the tax was fairly apportioned, that it did not discriminate against interstate commerce, and was fairly related to the services provided by the state. The Court went on to say that the tax is a fair measure of the state's contact within the given commercial transaction in all four aspects. This complete auto-test confirmed both the state's legitimate interest in taxing the transaction and the absence of an attempt to interfere with the free flow of commerce be it foreign or domestic. The Court went on to discuss international aspects of the tax and had no problem with those. He said that based on this case in the United States Supreme Court dated February 1993, and the lines of authority cited in it, that the tax found in this bill, while not entirely free from the tax on domestic and foreign commerce clauses of the United States Constitution, in his view, withstood these tests. SENATOR STEVE RIEGER asked if there was a distinction made whether the tax is imposed on the landing or on the fish. Mr. Cole said that the tax is a landing tax not on the fish. It is an event with substantial nexus with the state of Alaska. SENATOR TIM KELLY MOVED amendment 1 (copy on file). Senator Kelly spoke in support of the amendment which gave a tax credit for those who have been funding the Bering Sea Foundation. SENATOR JACKO OBJECTED. Senator Jacko said that this amendment was not necessary for this piece of legislation and that he had drafted another bill that would address this issue. Co-chair Pearce called for a show of hands and the amendment FAILED to be adopted on a vote of 4 to 3. Senators Kelly, Pearce and Kerttula were in support of the amendment. Senators Frank, Rieger, Jacko, and Sharp were opposed. Senator Jacko MOVED for passage of CSHB 264(FIN) from committee with individual recommendations. No objections being heard, CSHB 264(FIN) was REPORTED OUT of committee with a "do pass," and with a fiscal note for the Department of Revenue for $94.0, and a fiscal note for the Department of Commerce & Economic Development for $860.0. Co-chair Frank, Senators Jacko, Rieger, and Sharp voted "do pass." Co-chair Pearce, Senators Kerttula and Kelly voted "no recommendation."