February 10, 2005

Wyden, Smith bill would introduce flexibility into fishermens Capital Construction Fund

Legislation would eliminate tax penalty for non-fishing uses of CCF savings

Washington, DC U.S. Senators Ron Wyden and Gordon Smith today introduced legislation that would allow groundfish fishermen to also use their Capital Construction Fund (CCF) savings, without incurring significant tax penalties, for their retirement, for fishery capacity reduction, or for new gear to reduce bycatch. Currently, fishermen lose as much as 70 percent in taxes and penalties if they withdraw their savings from the CCF for non-fishing purposes.We need creative solutions to help reduce overcrowding in the groundfish industry and give our fishermen some regulatory relief, Wyden said. This bill will provide flexibility in the CCF and allow fishermen to use their savings for retirement and other ways that wont contribute to overcrowding in the fishery.This bill adjusts a well intended program which has grown outdated and become counter productive to its initial goals, said Smith. Fishing families know too well the ups and downs associated with their trade, and it doesnt make any sense to lock up money that can be used for a secure retirement.The Capital Construction Fund currently allows fishermen to accumulate funds, free from taxes, for the purpose of buying or refitting fishing vessels. It was conceived at a time when the federal government wanted to help capitalize and expand American fishing fleets; the program was a success and led to a larger U.S. fishing fleet. However, in recent years, landings of West Coast groundfish have dropped drastically and NOAA Fisheries has listed eight species as overfished. In 1999, the Pacific Fishery Management Council imposed drastic cuts, ranging from 14 to 85 percent, depending on the species, on the amount of allowable groundfish harvest. In January 2000, then-Commerce Secretary William Daley declared the groundfish fishery a disaster.The Wyden-Smith bill takes a significant step towards making the commercial fishing industry sustainable by amending the CCF to allow non-fishing uses of investments. The bill amends the Merchant Marine Act of 1936 and the Internal Revenue Code to allow funds currently in the CCF to be rolled over into an IRA or other types of retirement accounts, or to be used for the payment of an industry fee authorized by the fishery capacity reduction program, without adverse tax consequences to the account holders. The bill will also encourage innovation and conservation by allowing fishers to use funds deposited in a CCF to develop or purchase new gear that reduces bycatch.The Capital Construction Fund Qualified Withdrawal Act of 2005, introduced today, is expected to be referred to the U.S. Senate Finance Committee, of which both Wyden and Smith are members.