Alaska Supreme Court hears challenge to fish landing tax

Alaska’s Supreme Court is weighing the legality of a raw fish tax that has pumped at least $25 million into coastal communities over the past five years. But a lawsuit filed by a Washington-based seafood company could change that.

Since the 1990s, Alaska has taxed seafood caught by factory trawlers and floating processors through the Fisheries Resource Landing Tax. Even though the fish is caught outside the 3-mile line in what’s considered federal waters, it’s often brought to Alaska fishing ports before loaded on cargo vessels and shipped overseas. 

But the Washington state company, Fisherman’s Finest, is now challenging the state’s tax in court, arguing it violates a pair of provisions of the U.S. Constitution that restricts coastal states from imposing tariffs or duties on goods brought into and out of a state.

Attorney Jim Torgerson told the Alaska Supreme Court on Wednesday that the U.S. Supreme Court wrote in 1996, “has never upheld a state tax assessed directly on goods in import or export transit.”

“Yet the state is here today, asking this court to uphold a state tax assessed directly on goods in export transit,” he said.

Fisherman’s Finest won a lower court decision last year saying the fish tax is unconstitutional. But the State of Alaska has appealed.

Assistant Attorney General Laura Fox told the justices that the framers of the U.S. Constitution weren’t interested in giving some taxpayers preferential treatment.

“Catcher/processor operations take advantage of Alaska to further their business and Alaska’s landing tax merely requires them to pay their fair share for doing business in Alaska like other businesses do,” she said.

This fish tax brought in nearly $42 million over the past four years. More than half of that was shared with Alaska fishing ports.

But nowhere is the revenue more significant than Unalaska, where Dutch Harbor is homeport of the lucrative Pollock fishery.

“I think they should pay,” Unalaska’s vice mayor Dennis Robinson told CoastAlaska on Wednesday. “They use our services to be able to get their product to market.”

The port city in the Aleutians collected about $4.6 million from the raw fish tax in 2019. Adak was a distant second receiving about $150,000 during that same period. Robinson said if the tax is struck down, Unalaska could establish its own excise tax. But that wouldn’t do much for the rest of the state.

“As a city, we’d like to see that tax remain in effect,” he said. “And not only for our own interest, but for the interests of the state of Alaska.”

The Supreme Court justices asked only a few questions on Wednesday. It’s not clear when they’ll rule whether Alaska’s Fisheries Resource Landing Tax is legal under the U.S. Constitution.