Fisheries development tax credit making progress in state legislature

State lawmakers are looking at extending and expanding a tax credit for shoreside seafood processors in Alaska.

Alaska has given tax credits to salmon processors that invest in new equipment for nearly 20 years. That program was expanded back in 2014 to include herring processors. Senate Bill 33 would extend that program through 2026, but it would also go further by adding Pacific cod and pollock’s shoreside processors within Alaska to the umbrella for eligibility to the program. 

Kodiak Republican state Sen. Gary Stevens is the bill’s sponsor which passed unanimously on February 15 in the Senate. 

“It allows processors to get some assistance – get some reduction in the taxes they pay the state – if they can show that they bought equipment and find new processes that raise the value of the product they’re producing,” said Stevens. 

The existing credits on salmon and herring cost the state $2.3 million  to $4.4 million between 2017 and 2020. And adding Pacific cod and pollock processors could cost the state $2.9 million to 5.1 million per year. The tax breaks wouldn’t impact fish taxes that pay for local government services, according to Stevens.

But the payout to the state’s seafood industry would be big – according to processors – especially if cod and pollock processing facilities are added to the program. 

Mark Palmer is the chief executive of OBI Seafoods, which has 10 processing facilities in Alaska, including three on Kodiak Island. He spoke in support of the bill at a January meeting of the Senate Finance Committee.

“The kinds of equipment that we have to invest in are hugely expensive, and seasons that only last six weeks, it is hard to amortize that expense over such a short season,” he said. 

Salmon is the state’s most valuable fishery, according to the Alaska Resource Development Council, followed by pollock. 

China used to buy up over a third of the state’s seafood exports – between the pandemic and trade war, that’s dropped by 20% since 2018. Most of that fish went to China as a raw product, and Chinese processors use more parts of the fish to refine higher end products like cosmetics and pharmaceuticals. 

Palmer told Senators that financial incentives to buy new equipment will give processors in Alaska a chance to compete.

“The opportunity is there for us to invest in equipment for full utilization  for nutraceuticals, pharmaceuticals, other value-added food grade products,” said Palmer

More than a dozen processors, fishermen advocacy groups and economic development organizations in the state have voiced their support in favor of the bill. It hasn’t drawn any written opposition either, and it has a good chance of passing this legislative session. 

“We haven’t had much opposition, it’s just that it takes time,” said Stevens.

A companion bill proposed by Kodiak Republican House Speaker Louise Stutes is making swift progress and awaits a vote on the House floor. 

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