JUNEAU — Fishing industry and lawmakers on Thursday puzzled over the origins of a proposed one percent tax increase in fisheries business taxes and fishery resource landing taxes.
During a hearing on the bill by the House fisheries committee, fishermen testified that they did not understand the origins of the increase. It is expected to raise $18 million in new revenue for the state annually, according to the Department of Revenue. It is one of six proposed industry taxes from Gov. Bill Walker, including increases to mining, motor fuels, alcohol and tobacco taxes.
“Are you telling me that a group of people got behind closed doors and pulled out the dart and the dart board and the dart landed on that increase? Is that what you’re saying?” Rep. Bob Herron, D-Bethel, said after he asked fishermen if they understood how the increases had been calculated. Each said they did not.
In its current form, the bill increases by one percent three different tax rates within the Fisheries Business Tax structure, a tax on direct marketers and the tax on floating processors. It also increases the Fisheries Landing Tax.
The director of the department’s Tax Division, Ken Alper, said he could provide the committee with the model used to determine the proposed tax rate, but he said there had not been a formal study. Leadership in the Alaska Department of Fish and Game was consulted when developing the new tax, Alper said.
“It wasn’t a heavily documented and scientific scenario analysis,” he said. “To get to that point, we talked a few ideas around the circle and relatively quickly settled on this one, so that there isn’t very much paper track record to provide to the committee.”
Rep. Charisse Millett, R-Anchorage, said she was uncomfortable with the department’s methodology.
“It seems odd that you sat around a room and threw out some numbers,” said Millett, the House majority leader. “It gives me great pause if that’s how you’re coming up with a tax on an industry.”
Alper referenced a University of Alaska Anchorage Institute of Social and Economic Research study that found that most of the benefits from the commercial fishing industry go to local government, while the state spends more regulating the industry than it takes in revenue from the industry.
“We wanted to raise in the neighborhood of $15-20 million on a tax increase,” he said after the meeting. “We felt that it was a reasonable amount given the current taxation level.”
Bob Thorstenson, executive director of the Southeast Alaska Seiners Association, said he opposed any tax increase that did not address inequities in the current tax structure. He said the last time the structure had been updated was in 1982.
“At some point, these tax regimes need to be vetted. They need to be well thought-out,” Thorstenson said “What are we going to do now? We’re just going to drop something on the table?”
Alper said it’s possible that the fisheries tax structure could be changed to make it more equitable.
“We are not using this session as an opportunity to rewrite a lot of the underlying principals in all of these different taxes,” he said. “We’re just trying to tweak them as simply as possible to generate a needed amount of revenue.”
The fisheries committee is scheduled to hear the bill again on Tuesday for what the chair, Rep. Louise Stutes, said will be the last time. Stutes, R-Kodiak, said the final hearing was not a guarantee that the bill would pass through the committee.
