Congressman Faleomavaega Eni recently introduced legislation for American Samoa only to either extend or make permanent the U.S. Internal Revenue tax code 936 due to expire in two years.
The Congressman describes the measure as a means "to save American Samoa's canned tuna industry and to encourage economic growth and development in the Territory." Faleomavaega said in a statement that he and cannery executives have been working "for some time...to craft legislation that would make permanent or extend the federal IRS section 936 tax credit to American Samoa for another ten years."
Faleomavaega said that in January of this year, he met with the president of StarKist and Mr. Dave Burney, executive director of the U.S. Tuna Foundation. In October of last year, he met with the president of Chicken of the Sea/Samoa Packing and discussed this matter at length.
In July 2001, the Congressman continued, he also supported legislation that would have given the two local canneries the federal tax incentives they need to stay in American Samoa. "I was hopeful to get legislation passed last year but last year we had to put first things first" which is the matter of the Andean trade agreement "and save the jobs of more than 1,000 of our cannery workers," said the Congressman.
And with the Andean trade agreement already addressed, Faleomavaega said he is pleased that the presidents of StarKist and Samoa Packing are working closely with his office to address tax credit 936. "I am also pleased that the Governor is supportive of this initiative," said Faleomavaega and recalled his Feb. 3rd letter to the Governor and the Fono seeking their support for this effort.
In that letter Faleomavaega had explained that the U.S. tuna industry is facing serious competition from foreign countries pointing to China, as an example, which "is aggressively building its fishing fleet."
"Taiwan is building bigger vessels and also increasing the number of boats it puts out to fish in the Western Pacific," the Congressman said. "In addition to these challenges, our tuna industry is also facing increased competition due to lower wage rates in foreign countries."
For example, cannery workers in Andean countries are paid 60 cents and less per hour compared to American Samoa's cannery workers, which are paid $3.60 per hour. "As I explained in my February 3, 2003 letter to the Governor, this is why our canneries need section 936. Section 936 provides federal tax benefits that help our canneries compete against countries with lower wage rates and we must successfully address this issue if our canneries are to remain profitable and competitive," Faleomavaega said recently in the statement.
Faleomavaega reiterated that the local economy is more than 80% dependent either directly or indirectly on the U.S. tuna fishing and processing industries.
He said the Governor and the Fono have been informed that he has sought support of the Interior Secretary and David Cohen, deputy assistant secretary of interior for insular areas.
"The chairman and the ranking member of the House Ways and Means Committee are aware of American Samoa's need for an extension of IRS section 936 federal tax credits and benefits," said the congressman.
Faleomavaega however has warned that this "will not be an easy matter" noting "it may be as difficult as the Andean trade agreement." According to the Congressman, this is due in part to the fact that this tax code has always been a federal tax credit not only for American Samoa but for other U.S. possessions, including Puerto Rico.
He said many in Congress want to see section 936 expire because pharmaceutical companies doing business in Puerto Rico have used 936 as a loophole to avoid paying their fair share of federal income taxes. "Now Congress is taking a hard look at this issue and it remains to be seen if we will be able to get section 936 benefits extended just for American Samoa," Faleomavaega explained. "At this time, I am hopeful that we will be able to save American Samoa's canned tuna industry and also encourage other investment and development in the Territory," he added.
Based on the various discussions and as follow-up to the Feb. 3rd letter to Tauese and the Fono, Faleomavaega said H.R. 1424, or the American Samoa Possession Tax Credit Act of 2003 was introduced a few days ago.
Copies of the measure will be forwarded to the Fono and the Administration.
Faleomavaega personally thanked Dave Burney, executive director of the U.S. Tuna Foundation, Dennis Mussell, CEO of Chicken of the Sea/Samoa Packing, and Don Binotto, president and managing director of StarKist.
"Just two weeks ago, these executives met in San Diego and reached agreement as an industry about pursuing 936 as is," he added. Thanking the governor again for his support, Faleomavaega said he is hopeful "that as we work together our canneries will be encouraged to remain and invest in American Samoa."