Saint Paul offers tax incentive for crab deliveries

Crab harvesters would get a tax break in effort to boost processing

Sales taxes at Saint Paul are up to 3.5 percent, but the good news for crab harvesters willing to deliver their catch to the island is the sales tax will now be only 2 percent.

The city council at this Pribilof Island community of about 500 residents rolled out the plan, effective July 17, at its June 29 meeting, on the heels of a vote by residents to increase their sales tax, for the first time in 45 years, by half a percentage point.

“The community has faced a double whammy of reduced opilio/snow crab TACs (total allowable catches) and reduced halibut quotas, which have severely affected the local economy,” said Simeon Swetzof Jr. a commercial fisherman who is the mayor of Saint Paul.

The snow crab TAC dropped from 67.9 million pounds in the 2014-2015 season to 40.6 million pounds in the 2015-2016 season. Similarly the recommended halibut quota for management area 4CDE, which includes Saint Paul Island, fell from 3.7 million pounds in 2011 to 1.28 million pounds in 2014 and 2015, but increased slightly to 1.6 million pounds this year.

To deal with the income loss, the city had to lay off personnel, cut its budget and dip into its rainy day account to make ends meet and keep its existing commitments, Swetzof said. Those costs include maintaining existing infrastructure including the harbor, the fuel farm, fresh water tanks, much of it for the support of harvesting and processing activities that take place within the harbor.

Some help on harbor upkeep did come from the U.S. Army Corps of Engineers, which has been at work at Saint Paul since May on a $19 million operations and maintenance effort to be completed by the end of August. The project includes dredging of the harbor and rebuilding of a portion of the detached breakwater that took the brunt of waves during a period of severe storms last December.

The community development tax incentive plan will be available to harvesters delivering B, C. CP and Community Development Quota shares which were not regionalized under the federal crab rationalization program. This includes the newly reopened bairdi/tanner crab fishery, one of the few crab fisheries not regionalized.

Deliveries of Bristol Bay red king crab as well as Pribilof red king crab and blue king crab, both of which are currently closed, would also benefit from the sales tax incentive plan, Swetzof said.

Under the crab rationalization project 90 percent of A shaes are matched with processor shares, and are given regional delivery designations to processors, while the other 10 percent are B shares, with no required processing designation.

C share, which constitute 3 percent of the individual quota share allocation, are divided between catcher vessels and catcher processors, and they also are under no restriction as to where they may be delivered for processing.

Given a reduced sales tax, the Saint Paul City Council hopes harvesters may choose to deliver to their city, rather than Akutan, King Cove or Dutch Harbor.

As for the half percent boost in the city sales tax, Swetzof said the reality is that it’s a very modest tax increase so “we are all in this together.

The Bering Sea commercial fisheries, particularly the snow crab fishery, has benefitted greatly from investments that the community has made in fisheries related infrastructure.
“It shouldn’t have to be just the local residents, who pay for the cost of building and maintaining infrastructure and providing services that benefit the crab harvesting and processing sectors,” he said.