Lowering the tax paid by fishermen who sell their fish directly to consumers could spur more salmon harvesters to start value-added processing, according to a senator sponsoring such a tax break.
Sen. Bert Stedman, a Sitka Republican, advocated a targeted tax break before the Senate Labor and Commerce Committee during a hearing for Senate Bill 286.
Currently, direct marketers pay a 5-percent fisheries business tax on the fish's retail value, which is the same tax paid by large off-shore processors. Supporters of the bill have argued that direct marketers are subject to taxes designed for larger processors, which unfairly penalizes them for trying to increase the value of their business. The bill would assess direct marketers a 3-percent fisheries business tax on the wholesale value of their fish.
"One could view that as an actual stimulus to encourage the industry to do more value-added (processing)," Stedman said.
That stimulus is a needed boost to the salmon industry, according to numerous fishermen from all over the state who testified at the hearing.
"(Direct marketing) is the only expanding, profitable piece of the salmon business that there is," said Kodiak fisherman Bruce Schactler, president of the United Salmon Association.
The new tax would also prevent fishermen from undervaluing their fish for tax purposes, said Kathy Hansen, executive director of the Southeast Alaska Fishermen's Alliance, by using regional averages for the wholesale value on which the tax is based.
Stedman also argued the bill would actually increase revenue to the state.
The bill creates a new license specifically for direct marketers. It defines a direct marketer as "a licensed commercial fisherman who processes fishery resources caught using a vessel that does not exceed 65 feet in overall length and is owned or leased by the commercial fisherman." The creation of the new license improves accountability for direct marketers to pay the fisheries business tax, Stedman argued.
"Hopefully it's going to increase the revenue to the state by more compliance and more value added," he said.
Labor and Commerce Committee Chairman Con Bunde, an Anchorage Republican, held the bill for further hearings next week. Of the half-dozen or so testimonies the committee heard, none opposed the bill.
The bill is one of a package approved by the Joint Legislative Salmon Industry Task Force. The Legislature created the task force in 2002 to recommend laws to help salmon fishermen, processors and communities cope with market changes caused by competition with foreign farmed salmon.
Masha Herbst can be reached at email@example.com.