Congressman Faleomavaega announced today that U.S. Secretary of the Interior Gale Norton has endorsed the intent of H.R. 629, a bill he introduced to extend 936 tax credits to American Samoa for purposes of protecting the Territory’s economy and the jobs of more than 5,000 cannery workers. The complete text of Secretary Norton’s letter dated November 9, 2005 to Chairman William Thomas of the Ways and Means Committee is included below. Secretary Norton also sent the same letter to Chairman Charles Grassley of the Senate Committee on Finance.
Dear Mr. Chairman:
Congressman Eni F.H. Faleomavaega has introduced H.R. 629, the American Samoa Possession Tax Credit Act of 2005, which is before the Committee on Ways and Means for consideration.
I strongly urge that Congress take action that would enable the two canneries in American Samoa to be eligible for the current U.S. possession tax credit for an additional 5 years because of the territory’s dependence on this one industry. During a recent meeting, American Samoa Governor Togiola informed me that more than 50 percent of American Samoa’s tax revenue is attributable to tuna canning and tuna-related activity within the territory. According to Congressman Faleomavaega, the canneries and related activity account for more than 85 percent of the territory’s private sector economy, and more than 70 percent of private sector employment. For these reasons, should they leave the territory, I believe that the economy of American Samoa would be devastated.
Ten years ago, Congress repealed section 936. However, Congress also recognized the unique challenges in American Samoa by providing full participation for existing claimants of section 936 benefits until January 1, 2006.
The Department of the Interior provides the American Samoa Government an operations grant of $23 million annually. The Department’s policy is to freeze the amount of operations support in order to encourage greater self-sufficiency. Should the canneries leave the territory, we can expect pleas for a massive increase in Federal assistance.
Phasing out the current tax benefits for American Samoa over 5 years would be viewed as a transitional step. It is the policy of this Administration to promote private sector economic development in the U.S. territories, and the Department of the Interior has launched an extensive program to assist American Samoa and the other territories to develop and diversify their economies. We are committed to working with the territories to achieve this objective.
Please feel free to call me if you have any questions.
“While I have previously expressed disappointment in the Department of the Interior for not supporting American Samoa sooner on this issue which I have brought to Secretary Norton’s attention since 2003, I am now pleased that Interior has decided to stand with us. However, with all due respect to the Administration and the Interior for their support, I must again express disappointment that Interior has recommended to Chairman Thomas and Chairman Grassley to extend our tax credits for 5 years rather than the 10 years I had proposed.”
“At this time, I do not know what impact Interior’s recommendation may have on the House Ways and Means and Senate Finance Committees but, given the importance of this issue to our economy and workers, Interior has known from the outset that my recommendation was for 10 years. This said, I again thank Secretary Norton for her endorsement and I also thank Chairman Williams Thomas and Ranking Member Charles Rangel of the Ways and Means Committee for their continued support,” Congressman Faleomavaega concluded.