Lawmakers and stakeholders are praising a proposal which would help encourage competitiveness of the state’s fishing and seafood processing sectors by establishing a preferential tax rate for vessel manufacturers.
Proponents say HB 1154 would supply needed jobs for the local community and help Washington renovate its fleet. One stakeholder has also suggested expanding the rate to benefit other types of manufacturers.
Currently, vessel manufacturers pay a Business and Occupation (B&O) tax rate of 0.484 percent of the gross receipt of their business activities.
This bill would lower the rate to 0.2904 percent for manufacturers of qualified vessels or their components.
The measure’s prime sponsor is State Rep. Gael Tarleton (D-36), and its cosponsors include State Rep. Norma Smith (R-10) and Sharon Tomiko Santos (D-37).
During a Mar. 6 public hearing, Tarleton told the Senate Ways and Means Committee that she has been working with the maritime trades and fishing industries to determine how to build the next generation of fishing vessels for Washington state – and the rest of the country. Lawmakers made efforts in the 1970s to plan for the future of sustainable fisheries, however those vessels are now 40 years old.
“This very small tax preference for…those industries will ensure all of those students and all of those individuals who we collectively have been supporting through career and technical education, apprenticeship programs and workforce development initiatives in our communities are now going to be the pipeline to build these vessels, to maintain them and to go to sea.”
She added that the bill will support the companies working around the state on fitting fishing fleets with sensors, engines, marine biology systems and other technologies.
Trent House, lobbyist for the port of Seattle, said the Washington Maritime Federation (WMF) supports the measure to “build the next generation of their vessels right here in our state.”
He referenced a 2016 port of Seattle and WMF economic opportunity analysis on the North Pacific fishing fleet which found that the fleet could spend upwards of $1.6 billion to modernize its fleet. “We want that construction, and we want the jobs that go with that,” he added.
Gordon Baxter, Vice President of the Puget Sound Maritime Trades Council, spoke to the bill’s benefit for the labor community.
“We need this bill to modernize our yards and train our next generation of workers…we need the shipping, which needs the shipyard, which needs the fisher folks as well as the suppliers. This bill will mean several hundred family wage jobs in the yard.”
Clay Hill, Government Affairs Director for Association of Washington Business (AWB), agreed the bill would benefit labor and businesses, but suggested lawmakers consider expanding its reach.
“It’s about family wage jobs and seizing a great marketing opportunity for our manufacturers. It’s about a win for labor and a win for business, which means a win for Washington.”
He then asked the committee to consider allowing the rest of the manufacturing sector to also benefit for a preferential tax rate. Hill cited businesses across the state from pizza oven manufacturers to furniture makers which would not be included under this bill.
“What is the distinction? They are manufacturers, they want to compete and win. They want a historic opportunity to compete against low-cost states and achieve extra market share and help labor by providing good family-wage jobs, so we’d ask you with the time left in session to also consider that broader win for Washington.”
Following public comment on other bills, lawmaker sent the measure to the Rules Committee. It has since been placed on second reading.