U.S. HOUSE PASSES TAX CREDIT EXTENSION FOR TUNA INDUSTRY

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PAGO PAGO, American Samoa (The Samoa News, July 31) - The US House passed on Friday a tax measure which includes a two-year extension of possession tax credits for American Samoa's canneries. However, the tax credit is no longer under IRC Section 936 but another tax credit called 30A.

Congressman Faleomavaega Eni explained in a statement that 30A has the same benefits as 936 but it is without the negative political connotation that worry some lawmakers stemming from 936's misuse in Puerto Rico.

[PIR editor’s note: according to PIR archives, debate on IRC section 936 began in March, with much opposition.]

Faleomavaega was successful in getting the US House and the canneries to agree on the replacement tax.

Togiola told Samoa News in an e-mail yesterday that he is glad the measure is moving forward.

"I am grateful for the efforts of Faleomavaega to keep this matter on the Congressional agenda and the favorable vote from the House of Representatives is encouraging," the governor said.

30A TAX

Faleomavaega explained 30A and 936 are similar in nature. He said the only difference is how the claim is made. Section 936 allows our canneries to claim a tax credit based on either profits or wages. Chicken of the Sea uses the profit credit and Star-Kist uses the wage credit.

"Under section 30A, our canneries would be required to make their claims based on wage credits," explained Faleomavaega. "Since Star-Kist is already doing this, 30A is no change for them. As for Chicken of the Sea, it determined that it is better for Star-Kist and COS to use the same methodology for determining possession income and therefore welcomed 30A as a perfect alternative that will give our canneries the same benefits as 936 without the negative political connotation."

Now the measure goes to the US Senate for their review and both Faleomavaega and Togiola are hoping the senators will give their approval.

Faleomavaega said he is hopeful that the Senate will continue to support 30A. He said the American Samoa Economic Development credit is only a very small part of this bill "and I am pleased that we are a part of it given that this provision is important to our canneries which are critical to our economy."

He added, "I am also pleased that, if supported by the Senate, this legislation will make our tax credits retroactive so that our canneries will not lose any money as a result of this on-going process."

Faleomavaega said he will continue to work with local leaders in developing a long-term economic policy that represents the interests of all vested stakeholders, especially our canneries, which are the backbone of our economy.

Togiola agrees that a permanent solution is best, but cautions that we also have to be mindful of the challenges that it brings.

[PIR editor’s note: Other issues that Samoan canneries have faced this year are fish shortages, and worker shortages.]

August 1, 2006

The Samoa News: http://www.samoanews.com/

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