[Congressional Record Volume 147, Number 159 (Friday, November 16, 2001)]
[Senate]
[Page S12005]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself, Mr. Hatch, Mr. Grassley, Mr. Miller, 
        and Mr. Bennett):
  S. 1722. A bill to amend the Internal Revenue Code of 1986 to 
simplify the application of the excise tax imposed on bows and arrows; 
to the Committee on Finance.
  Mr. BAUCUS. Mr. President, along with my colleagues, Senators Hatch, 
Miller, and Grassley, I am pleased to introduce the Arrow Excise Tax 
Simplification Act of 2001. This bill will protect funding for the 
Wildlife Restoration Program, the Pittman-Robertson fund, by 
simplifying administration and compliance with the excise tax and 
closing an unintended loophole that allows arrows assembled outside the 
United States to avoid the excise tax imposed on domestic 
manufacturers.
  The creation of the Wildlife Restoration Program is one of the great 
success stories of cooperation among America's sportsmen and women, 
State fish and wildlife agencies, and the sporting goods industry. 
Working together with Congress, Americans who enjoy the outdoors 
volunteered to pay an excise tax on sporting arms and ammunition to be 
used for hunter education programs, wildlife restoration, and habitat 
conservation.
  Originally the archery industry did not participate in this program. 
However, the growth of bow hunting in the '60s and '70s led the archery 
industry to decide they would support the excise tax that funds State 
game agencies. As a result, the tax was extended to archery equipment 
in 1975. The tax on archery equipment was meant to parallel the tax 
that hunters were paying on firearms and ammunition. The archery 
industry and bow hunters are pleased to contribute to the success of 
the Wildlife Restoration Program.
  Because current law taxes components and not arrows, foreign 
manufacturers are selling arrows in the United States without paying 
the excise tax that is imposed on arrows made in the United States. Not 
only are these untaxed imports unfair to American workers, they 
threaten the integrity of the Wildlife Restoration Fund.
  This issue is important to companies in Montana. Mike Ellig, a 
manufacturer of archery products in Bozeman, MT, pays this tax. He 
supports the tax, but asks that it be fair. Mike's company, Montana 
Black Gold, and the archery industry want to support the Wildlife 
Restoration Program. But the way the tax works today, American 
manufacturers are at a competitive disadvantage.
  This legislation will close the loophole that allows imported arrows 
to avoid the excise tax paid by domestic manufacturers. While keeping 
the current 12.4 percent tax on arrow components, the proposal will 
impose a tax of 12 percent on the first sale of an arrow assembled from 
untaxed components. U.S. manufacturers and foreign manufacturers will 
be treated equally.
  Since this loophole was inadvertently created in 1997, archery 
imports, mostly finished arrows, increased from $113,000 in 1997 to 
$2,600,000 in 2001 to date. If Congress does not act quickly to close 
this loophole, domestic manufacturers will be forced to relocate 
outside of the United States. They simply cannot afford to lose market 
share for a fifth year to competitors who do not pay the same tax they 
pay. If a few more move overseas, the rest will follow. The result will 
be a catastrophic loss of revenue for the Federal Wildlife Restoration 
Fund.
  Current law also taxes non-hunters, contrary to congressional intent. 
To relieve non-hunters from the requirement to pay for wildlife 
management, the legislation would eliminate the current-law tax on bows 
with draw weights of less than 30 pounds. Those bows are not suitable 
or, in many States, legal for hunting. To preserve the revenue for the 
Wildlife Restoration Fund, the bill would retain the current tax on 
bows that are suitable for hunting.
  The proposal would also clarify that broadheads are an accessory 
taxed at 11 percent rather than as an arrow component taxed at 12.4 
percent. This will correct the ambiguity in the 1997 act that led to 
the misclassification of broadheads.
  In summary, the Arrow Excise Tax Simplification Act of 2001 would 
accomplish worthy objectives. It would close the loophole that allows 
foreign imported arrows to escape the tax and remove the tax on youth 
and recreational archery equipment that were never meant to be taxed. 
We will accomplish these goals while protecting the Wildlife 
Restoration Program by ensuring that there is no significant diminution 
of revenues collected by the archery excise tax. The Joint Committee on 
Taxation estimates the proposal will decrease revenues by $5 million 
over ten years resulting in small changes in outlays from the Federal 
Aid in Wildlife Fund. Failure to close the import loophole will 
eviscerate the archery tax base resulting in devastating losses to the 
fund.
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