Seafood Industry Wins Its Tax Battle : Bill to Wipe Out Millions in Never-Collected Revenue Signed

Gov. George Deukmejian gave California’s ailing seafood industry a major victory Wednesday, signing into a law a measure to forgive half a century of never-collected taxes owed by commercial fishing enterprises.

The measure by Assemblyman Gerald N. Felando (R-San Pedro), a former fisherman, lets the industry off the hook for undetermined millions in taxes that should have been collected from seafood wholesalers, processors and brokers over the past 51 years, according to state auditors and Atty. Gen. John Van de Kamp.

State Fish and Game officials say it was through a legal misinterpretation that they never sought to collect the taxes except at dockside.

Seafood industry officials, who characterized Felando’s measure as the most important for them of the legislative session, said that seafood prices would have risen and that the $2-billion-a-year industry would have faced a severe economic hardship had state officials begun imposing the tax now.

Fish and Game officials supported the industry position, saying that inadequate or non-existent records would have made the tax-collection effort expensive and difficult.

“We are just extremely pleased that the governor signed the bill,” said Rob Ross of the California Seafood Institute. “We were just shocked when we saw what the attorney general’s opinion (released in July) said.”

Ross said the industry would have been forced to launch “a long, long uncertain battle in court” had the Legislature and governor not agreed on the tax-forgiveness measure.

Assemblywoman Doris Allen (R-Cypress), a staunch opponent of forgiving the back taxes, estimated that the seafood industry owed around $13 million for the past 10 years alone.

Allen, a persistent critic of the state Department of Fish and Game, began complaining nearly two years ago that the tax should be levied each time that fish caught in California waters changed hands. But her complaint was largely ignored until the audit and the attorney general’s ruling confirmed that she was correct.

Allen said Wednesday that she was “very disappointed” that Deukmejian signed the bill. She said it was a slap in the face to sports fishermen and hunters, whose licenses and fees pay $50 million of the Fish and Game Department’s $90-million annual budget.

“Everywhere I speak, the indication is they (sportsmen) wanted that bill vetoed,” said Allen, who charged that commercial fishing enterprises are getting undeserved tax breaks while depleting the state’s natural resources.

Also awaiting action by Deukmejian are bills that would extend the commercial fishing industry’s sales tax exemption on boat fuel until 1989 and another measure that would give fishermen a similar exemption from sales taxes when they purchase helicopters to be used in deep-sea fishing operations.