Update: U.S. House approves tax credit extension for Am Samoa
The US House of Representatives approved last Thursday a major federal tax reform legislation, which includes a provision extending an economic development tax credit for US companies operating in American Samoa.
Standing to benefit the most from the tax extender — an issue that territorial government leaders have been working on since early 2013 — is StarKist Co., and its local subsidiary StarKist Samoa cannery. The legislation now goes to the US Senate where they are considering their own version of the tax reform legislation.
Last Thursday afternoon the US House passed the Tax Cut and Jobs Act of 2017, and Congresswoman Aumua Amata said the bill includes a key provision that extends the American Samoa Economic Development Credit (ASEDC).
“This tax credit is an ongoing priority for American Samoa’s economy,” said Aumua in a news release last Friday. “The provision encourages investment and preserving jobs in American Samoa.”
The previous economic development credit was valid for two years and expired Dec. 31, 2016. The House bill extends the credit for six years, retroactive back to Jan. 1, 2017, according to Congressional records.
Responding to a Samoa News request for comments, ASG Commerce Department director Keniseli Lafaele said this issue has been “a key topic of discussion among government leaders” since January 2013 — when the Lolo Administration took office — “in efforts to sustain our fishery industry in the face of serious challenges from many fronts.”
This provision “would help keep StarKist Inc. — the largest private employer on island — in the territory for 6 more years,” Lafaele said over the weekend. “Let's hope the US House passage eventuates into Congress passing the much needed extension of the ASEDC.”
Another senior ASG official said Friday that Gov. Lolo Matalasi Moliga is being kept abreast of Congressional developments, especially tax benefits to boost the local economy.
“StarKist at this point needs all the help under federal tax benefits, and the latest development with the US House bill passage is very encouraging,” said an official who responded to Samoa News questions, only to provide background information but not to be quoted by name.
Early this month, Amata announced the tax extender provision for American Samoa being included in the Tax Cuts and Jobs Act of 2017, in which she worked closely with US Rep. Kevin Brady, who is chairman of the US House Ways and Means Committee and also introduced the legislation.
In making this change — tax extender for American Samoa — the committee’s report states in part that, it “recognizes the importance of providing incentives to stimulate economic development, create jobs, and fund infrastructure in American Samoa,” says Congressional online records.
With the House bill passed, Congresswoman Amata said the focus now is working on the final outcome, which will result from both the Senate and House efforts.
“We’re pleased to not only get our request for an extension of the tax credit itself, but also add economic stability by expanding it to six years for better business planning,” she said in the news release last Friday. “It’s important that our federal tax policy reflects an understanding of American Samoa’s unique economic needs.”
A 2007 US Department of Labor report regarding the impact of federal minimum wage on American Samoa notes that the loss of the economic development credit “would be a damaging blow to the profits of the American Samoa canneries causing possible relocation."
Lolo has made clear to the federal government, since early this year, that StarKist Samoa is now the only cannery operating in the territory, and the loss of it, would spell devastation for the local economy, which has depended on the canneries for many years.
He has urged the federal government to restore the federal 30(A) tax credit, which would further help StarKist as well as other businesses looking to invest in American Samoa.