That great online deal you scored might have meant you weren’t doing your part to support fishing.
Taxes from tackle sales and money from fishing license sales are dedicated to state wildlife agencies to benefit the resources and provide access for anglers. Buying online from a foreign company at times can bypass those excise taxes, which cheats the system, says Mitch King of BEAM Consulting.
“The big issue that anyone needs to be aware of is the leakage of excise tax dollars,” King said. “Because of internet sales, a lot of people are looking for the cheapest way to buy tackle. We’re getting it 10% cheaper, wondering why and thinking that’s the greatest thing in the world, but what’s happened is they’re bypassing the excise tax. It’s a pretty significant hit and can really hammer the state fish and wildlife agencies.”
King, who worked on excise tax issues during his 31 years with the U.S. Fish and Wildlife Service, continues consulting in that same vein with state agencies and others. He also holds seminars on the topic, recently addressing the topic during one of ICAST’s online seminars last month.
The question King is asked most: Where do excise taxes go?
First, he provides some background. In 1937, the Pittman-Robertson Act created the Wildlife Restoration Fund that’s supported by an excise tax paid by firearm and ammunition manufacturers and importers. The fishing world followed that successful user-play, user-pay system, which saw wildlife populations rebound and flourish, with the Dingell-Johnson Act of 1950. It created the Sport Fish Restoration Fund, which put a 10% tax on manufacturers and importers of fishing tackle.
“These excise taxes on sport fishing equipment as well as motorboat taxes go to state fishing agencies,” he said. “And they are exclusively used, along with fishing license sales, to help grow fishing, help provide access. They go to grow fishery populations.”
King said state wildlife agencies can get from 60 to 80% of their operating budgets from this revenue stream. Addressing the business aspect in his ICAST webinar, he said that increased fishing opportunities, with state agencies able to build more ramps and fishing piers and stock more fish, creates a scenario of revolving funds.
“They go toward making sure you and all your customers have really good opportunities to go out and fish and get their boats out on the water,” he said. “If that happens, you know they’re going to be coming in buying your equipment. Bottom line, these taxes go to grow your business.”
King details where the $487 million in annual funding from federal excise taxes goes in his Rising Tide graphic:
- 200 species of fish that state agencies monitor, research and manage;
- 316 state hatcheries that annually produce 1.3 billion fish of more than 70 species;
- 1,000 new ramps constructed every five years to improve boater and angler access;
- 6,439 areas operated and maintained for public boating and fishing areas;
- 1 million students receive training in aquatic education every three years.
King said 10% is the standard excise tax on most all fishing equipment, with exceptions being fishing rods having a $10 cap and tackleboxes and electric motors taxed at 3%. The Federal government requires a 25% match," he said, “So states can take $1 in fishing license revenue and match it up with $3 of the excise taxes.
“All of the fishing license dollars stay with the state and are restricted from being used on anything other than fishery management. If you’re in the state of Arkansas and buy a fishing license, you can rest assured all of that money goes to your state’s efforts,” King said. “Every state, before they could receive excise taxes, they had to guarantee that they would not divert any money out of the excise taxes or their license revenue for non-fishery activities. That’s been tried many times. The governors have looked over at that and said, ‘Let’s just take this fishing license dollars or excise tax dollars,’ and they can’t do that. They get in trouble real fast.”