Fish Industry Kept Dangling on Tax Hook

The Senate on Thursday rejected a measure that would have let California’s $2-billion-a-year seafood industry off the hook for decades of never-collected taxes.

The measure by Assemblyman Gerald N. Felando (R-San Pedro), which had been approved by the Assembly Wednesday, fell four votes short of the required two-thirds approval in the Senate. Backers said they would seek reconsideration of the 23-9 Senate vote today.

Felando, who represents Southern California commercial fishing interests and has family ties to the industry, says the measure is needed because of a July 10 attorney general’s opinion confirming that wholesalers, canners and processors, as well as fishermen, owe a “privilege tax” that the Department of Fish and Game never has collected.

Although statutes calling for the tax have been in effect for 51 years, Felando and other backers of the measure say the Legislature never intended for anyone other than fishermen to pay it.

Assemblywoman Doris Allen (R-Cypress), a persistent critic of the Department of Fish and Game, has been complaining for nearly two years that the tax should be levied each time fish caught in California waters changes hands. The attorney general’s opinion, and a report by the state auditor general last December, confirmed that her interpretation was correct.

Begin Collecting

Unless legislation forgiving the taxes is approved before the Legislature adjourns this week, Fish and Game officials say they will begin collecting from nearly 1,500 seafood wholesalers, brokers and processors in September. The officials say the commercial fish enterprises also have been informed that they may be subject to retroactive taxes.

Sen. Barry Keene (D-Benicia), a supporter of the tax-forgiveness measure, said multitiered taxing would be “a totally new interpretation” of the law that would “impose an extreme economic hardship on an already severely depressed California seafood industry.”

But Sen. John Seymour (R-Anaheim) said it would be “unconscionable” to forgive the taxes. “In my opinion, it amounts to a gift of state funds in the amount of $13 million,” Seymour said.

Allen has charged that both the industry and Fish and Game officials have known at least since a 1962 court ruling that the taxes should have been collected but that state officials intentionally have avoided enforcing the tax law.