Senate Passes Tax Forgiveness for Seafood Industry

Reversing an earlier vote, the Senate has sent Gov. George Deukmejian a bill to forgive a half-century of back taxes that were never collected from seafood wholesalers, processors and brokers.

If signed by the governor, the action will end a two-year fight by Assemblywoman Doris Allen (R-Cypress) to force state Fish and Game Department officials to collect the so-called privilege taxes.

Based on a state audit conducted at her request last year, Allen estimated that seafood enterprises owe $13 million in back taxes for the past 10 years alone.

The tax forgiveness bill by Assemblyman Gerald N. Felando (R-San Pedro), a former fisherman, became one of the most heavily lobbied nearing the end of the two-year legislative session. After being voted down a day earlier, the measure won the necessary two-thirds approval shortly before 11 p.m. Friday after four roll calls.

Representatives of California’s $2-billion-a-year seafood industry said seafood prices would rise and they would face a severe economic hardship if state officials began imposing the tax. Fish and Game Department officials, who supported the industry position, said inadequate or non-existent records would make the tax collection effort expensive and difficult.

Although statutes calling for the tax have been in effect for 51 years, industry spokesmen said the Legislature never intended for anyone to pay it.