February 24, 2016 — Commercial fisheries may see taxes increase, but only if other resource industries do, too.
Under a budgetary thundercloud, Gov. Bill Walker is trying to squeeze funding from any source. A commercial fisheries tax bump, part of nine such bills in the Legislature, has slowed to a crawl in committee as fishermen decry it.
Fishermen, and House Fisheries Committee chair Rep. Louise Stutes, R-Kodiak, fear Walker’s tax plan could disproportionately pinpoint the commercial fishing industry while other resource taxes die.
Stutes said during a Feb. 23 committee hearing that she’ll hold the bill in committee until further study.
“I have some reservations about passing this bill out of committee,” said Stutes. “I’ve been seeing a lot of the other resource tax bills faltering. I’m going to hold this in committee until I’m comfortable that the fishing industry is not being singled out. I would like this committee to assimilate and digest what they’ve heard.”
United Fishermen of Alaska, the state’s largest fishing industry group, brooked little opposition to the bill during a February meeting, but cracks appeared once Stutes opened the committee to public comment. The committee heard from fisherman that the tax plan seemed poorly thought out.
Richie Davis, a representative for the Seafood Producers Cooperative, said the tax bump is proof that either the Walker’s administration doesn’t fully grasp the social and economic aspects of the fishing industry, or “or somebody is using Alaska’s fiscal crisis as a springboard to cripple our industry.”
1 percent across the board
House Bill 251 would levy a 1 percent increase on commercial fisheries taxes. Current rates range from 1 percent to 5 percent, depending on the category.
Comment from two separate hearings on Feb. 18 and Feb. 23 called the tax plan too simple, too rushed, and too ignorant of the other resource taxes in the state. A 1 percent across-the-board raise, fishermen said, ignores the industry’s nuances and unique challenges.
The fisheries tax schedule is one of the more complex in Alaska tax code. The fisheries business tax and fisheries resource landings tax sprawl across different categories and sectors.
The state levies a fishery business tax and a fisheries resource landing tax, which distinguish between established fisheries and developing fisheries, each with different rates for floating processors, salmon canneries, and shore based processors.
The 1 percent tax rate increase doesn’t make enough distinctions, industry said.
“The approach HB 251 takes is quite frankly oversimplified,” said Vince O’Shea, vice president of Pacific Seafood Processors Association.
O’Shea, along with Icicle Seafoods representative Kris Norosz, pointed out that a 1 percent increase could conceivably work for some sectors but would stress salmon canneries, which are glutted with oversupply and having trouble profiting at the current 4.5 percent cannery rate.
“There hasn’t been quite enough analysis on the proposed action,” said Norosz. “I’m not quite sure how we got to this.”
Ken Alper, director of the state’s Department of Revenue Tax Division, said the 1 percent tax rate bump aims to bridge the gap between the state’s spending on fisheries management and its revenue.