Salmon Product Development Tax Credit Heading Toward Extension

By Margaret Bauman

Legislation that would extend a salmon product development tax credit through 2015 was moving through the Alaska Legislature in final days of the current session, with passage anticipated.
The measure cleared the House on April 7 and moved to the Senate Finance Committee.
“Chances are close to 100 percent of passing,” said Pete Ecklund, an aide to House Finance Committee Vice-Chair Bill Thomas, R-Haines, who initially sponsored House Bill 344.
The current law expires on December 31, 2011. Extending the law for four years would allow processors ample time to continue long-range investment planning, Thomas noted in his sponsor’s statement.
If approved by the Senate, the measure would take effect in 90 days.
According to staff in the legislative information office, the state anticipates a decrease of $2.4 million annually in fisheries business taxes for each additional year that the credit is extended.
The program allows applicants to claim a credit on their annual fisheries business tax for 50 percent of purchase costs of eligible equipment. The bill adds ice making machines to the list, which already includes equipment used for filleting, skimming, portioning, mincing, forming, extruding, stuffing, injecting, mixing, marinating, preserving, drying, smoking, brining, packaging, blast freezing or pin bone removal.
Thomas noted in his sponsor’s statement that the House Fisheries and Finance Committees added ice machines to the list of investments that qualify for the tax credit. “Having a top quality base product delivered to processors is a prerequisite to further value adding processing of salmon,” Thomas said.
“Alaska’s salmon industry is beginning to recover from years of low values caused by competition from fish farming, the recent economic depression, changes in the marketplace, and increasing labor and energy costs,” he said. “Extending the tax credit beyond its current sunset date of Dec. 31, 2011 will allow the industry to continue the progress that is being made in developing and producing salmon products that will keep Alaska’s fisheries competitive in world markets. “
Thomas noted that the salmon product development tax credit was a key recommendation of the Joint Legislative Salmon Industry Task Force.
“First enacted in 2003, the credit was part of an effort by Alaska’s elected leaders and the fishing industry to develop innovative value-added salmon products. Since then it has stimulated some important changes in Alaska’s commercial fishing industry.
“New processing equipment eligible for the tax credit enables businesses to offer a more diverse complement of Alaska salmon products which helps increase overall customer acceptance. Modern equipment also helps increase efficiency of processing operations and improves output, resulting in improved quality. Increased investment in Alaskan equipment encourages in-state processing of our salmon resource which is critical to job creation and retention in fishing communities,” Thomas wrote.