Congressman Faleomavaega announced today that in addition to including an extension of 936 tax credits for American Samoa for an additional year, Chairman Bill Thomas of the Ways and Means Committee has agreed to Faleomavaega’s request to include language in the Conference Report which obligates the Committee to provide for the development of a long-term policy for American Samoa.  The language states:

The Committee understands that the tuna canning industry is the largest employer in American Samoa and is the primary beneficiary of the section 936 credit in American Samoa.  The Committee believes that the expiration of the section 936 credit would negatively impact the economy of American Samoa and that the credit therefore should be extended for an additional year to provide time for the development of a comprehensive long-term policy with respect to American Samoa.

The Committee is aware that the Government Accountability Office and the staff of the Joint Committee on Taxation are in the process of preparing reports regarding the impact of U.S. Federal tax policy on Puerto Rico, including an analysis of the tax and economic policy implications of proposed legislative options and the revenue costs of those options.  The Governor of Puerto Rico has expressed support for the extension of the section 936 credit to American Samoa while awaiting these reports concerning Puerto Rico.  Pending completion of these reports, the Committee believes it is appropriate to extend the section 936 credit to American Samoa in recognition of the conditions facing that territory.

“Conference Report language is binding,” Faleomavaega said, “and this means that if the House and Senate pass this legislation then American Samoa will win a short-term extension and a long-term policy.  This said, I believe it is important to explain the facts relating to this important and historic work.”

“One, American Samoa is the only Territory being provided an extension of 936 tax credits in H.R. 4297.  Section 936 tax credits are expiring at the end of this year for all other insular possessions except American Samoa.”

“Two, as a matter of practice, Congress extends provisions in the year prior to their expiration.  For American Samoa, section 936 is set to expire on January 1, 2006 meaning Congress was scheduled to address our concerns in 2005.”

“Three, to make sure American Samoa was in a strong position in 2005, I placed us on the radar screen in 2001, 2002, 2003, 2004, and 2005.  I also was very involved in the 1996 legislation that gave our tuna canneries the tax benefits they enjoy today.”

“Four, in addition to extending 936 tax credits for an additional year, Chairman Thomas also agreed to insert binding language in the conference report which assures that a long-term policy will be developed for American Samoa at such time as the Committee can act.” 

“Five, the only reason a long-term policy cannot be implemented at this time is because the Government Accountability Office (GAO) and the Joint Committee on Taxation are in the process of preparing reports regarding the impact of U.S. Federal tax policy on Puerto Rico and other insular possessions including American Samoa.  This research has been ongoing since 2003 and until such time as the reports are completed Congress cannot act beyond the one-year extension we have been provided.  However, once the reports are completed and provided that the House and Senate pass H.R. 4297, then the Committee will begin to act on the long-standing commitment Chairman Thomas and I have in place to develop a long-term policy for our canneries, new investors, and current business owners.”

 “Six, it should be noted that StarKist and Chicken of the Sea never promised they would stay in American Samoa even if they were provided with 936 tax credits and I respect their decision to do business in whatever location maximizes their profits since they have stated time and time again at our minimum wage hearings that this is the guiding principle of any business.  Knowing of their allegiance to their stockholders, I have said for years that our local government should be in the process of diversifying our economy and reviewing our local tax policies.  To assist ASG, I was able to get the federal government to provide $600,000 to establish the American Samoa Economic Development Commission.  The Commission concluded its study in 2002 and, in conjunction with the people of American Samoa, developed an economic plan.  To this day, our local government has yet to implement or act on the findings of the Commission.”

“Incidentally, a 2000 GAO report found that taxes collected under the gross receipts tax from the garment and tourism industries in the CNMI have helped make the CNMI more fiscally self-sufficient than the other possessions.  Why is it that the same cannot be said about American Samoa considering that the U.S. tuna industry has been operating in our Territory for the past 50 years and has exported in excess of ten billion dollars from us?  Again, we cannot and should not depend entirely on the federal government to solve our problems.  Our local government must also assume responsibility for implementing better tax policies.” 

“As always, I thank the local leaders of American Samoa who have worked with me to protect the jobs of our cannery workers and have supported my efforts to win a short-term extension and a long-term policy.  I also thank Chairman Thomas and Ranking Member Rangel for their friendship and support.”

“At this time, I remain hopeful that H.R. 4297 will pass the House.  However, I also know the vote will be very close and we will have to patiently await the outcome.  While it was anticipated that the vote would occur today, the vote has now been postponed until the first week of December.  Nevertheless, I will continue to keep our people updated as this matter progresses,” the Congressman concluded.