Congressman Faleomavaega announced today that on Thursday March 10, 2005 he met with Chairman Bill Thomas of the House Ways and Means Committee. Congressman Randy “Duke” Cunningham also attended the meeting and offered his full support for H.R. 629, a bill Faleomavaega introduced to make permanent or extend 936 tax benefits to American Samoa’s canneries.
“At this time, I want to publicly thank Chairman Thomas for taking the time to meet with me to discuss H.R. 629,” Faleomavaega said. “H.R. 629 is a very important piece of tax legislation that is critical to the future of American Samoa’s canneries. IRS 936 tax benefits provide an incentive for StarKist and Chicken of the Sea to operate and invest in American Samoa. In fact, IRS 936 tax benefits make it possible for StarKist and Chicken of the Sea to compete against tuna catching nations with lower wage rates.”
“For example, wage rates for cannery workers in American Samoa are about $3.60 per hour while wage rates in Asia and the Andean countries are $0.60 and less per hour. IRS 936 federal tax benefits offset these wage disparities and level the playing field for our canneries. Without these benefits, the future of our canneries is in question and Chairman Thomas understands this.”
“Chairman Thomas understands that more than 80% of American Samoa’s private sector economy is dependent either directly, or indirectly, on two U.S. canneries, StarKist and Chicken of the Sea, which together employ more than 5,100 people or 74 percent of the Territory’s private sector workforce. Given American Samoa’s dependency on these two canneries, the Chairman is interested in knowing if StarKist and Chicken of the Sea are committed to staying in American Samoa if the federal government extends 936 benefits,” Faleomavaega said.
“So far, our canneries have said that they will leave if they don’t get 936 benefits but, the question remains, will they stay if these benefits are extended. StarKist and Chicken of the Sea do not support local alternatives. In a letter dated March 7, 2005, John Signorino, President and CEO of Chicken of the Sea, stated:”
Dear Congressman Faleomavaega:
Thank you for your leadership and support of Section 936. As we have discussed, extending this tax credit is critical to Chicken of the Sea and the future of our plant in Samoa.
On behalf of Chicken of the Sea I feel that extending the tax credit is the only viable option we have. We do not support any local alternatives.
Eni, as discussed, Section 936 tax credit is very important to Chicken of the Sea and to our operation in Samoa. We appreciate your support and everything you have done for us regarding this and other critical initiatives. We look forward to working with you.
“Also in a letter dated March 7, 2005, Peter Smith, Managing Director of StarKist
Dear Congressman Faleomavaega:
I am writing to follow-up on our meeting last week and to again thank you for your leadership in Washington to extend the tax benefits of Internal Revenue Code Section 936.
As you know, for over 80 years Federal income tax laws have provided an incentive for U.S. corporations to operate and invest in U.S. insular possessions, including American Samoa. The obvious intent of this policy was to encourage employment-producing investments by U.S. corporations in U.S. possessions. In American Samoa, this incentive has been successful by allowing two tuna canneries to flourish over the past 50 years. Today, more than 80 percent of American Samoa’s economy is dependent either directly or indirectly on these two U.S. tuna canneries, StarKist and Chicken of the Sea, which together employ more than 5,150 people or 74 percent of the private sector workforce.
The Section 936 possession tax credit has encouraged both canneries to remain and invest in American Samoa. If the credit is allowed to lapse, StarKist firmly believes that they will have to depart American Samoa, devastating what remains of the U.S. tuna industry and the American Samoa economy as well. Quite simply, Section 936 is THE solution that keeps StarKist in American Samoa.
We at StarKist strongly support your efforts to enact the American Samoa Possession Tax Credit Act of 2005, H.R. 629, and stand ready to assist in any way possible.
Thank you again for all of your hard work on behalf of StarKist and the people of American Samoa and please let us know how we can help.
Peter L. Smith
“While all of us are appreciative of local efforts to come up with alternatives, there is no acceptable alternative to 936, according to our canneries. Our canneries are interested in federal tax benefits, not local tax credits. And despite the good-intentions of the Department of the Interior, 936 is a federal tax law which cannot be changed or altered by local governments or through technical assistance grants.”
“Federal law can only be amended by Congress. And in Congress, the House Ways and Means Committee is responsible for any and all tax legislation. This is why Chairman Thomas’ support is critical. The support of Congressman Charles Rangel (D-NY), Ranking Member of the Ways and Means Committee, is also necessary. Only with the support of Chairman Thomas and Ranking Member Rangel will 936 benefits be extended to American Samoa.”
“Again, our canneries have made their position clear. Our canneries want 936. Our canneries do not want or support alternatives and there are no other available means of retaining federal benefits for our canneries except through the Congress. Once more, I thank Chairman Thomas and Ranking Member Rangel of the Ways and Means Committee for considering H.R. 629. I also thank StarKist and Chicken of the Sea for their support and I remain hopeful that our Governor, President of the Senate, Speaker of the House, and Members of both Chambers will work together in support of this effort so that we will be unified in the message we send to Congress and the Secretary of the Interior. Otherwise, the economic future of our Territory will be seriously at risk,” the Congressman concluded.