[Congressional Record Volume 149, Number 25 (Tuesday, February 11, 2003)]
[Senate]
[Pages S2188-S2189]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  By Mr. BAUCUS (for himself, Mr. Hatch, Mr. Miller, Mr. Grassley, Mr. 
Bayh, and Mr. Lugar):
  S. 339. 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, Bayh and Grassley, I am pleased to introduce the Archery Excise 
Tax Simplification Act of 2003. 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 ready-to-fire 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

[[Page S2189]]

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. That is why the 800 
members of the Montana Bowhunters Association support this measure.
  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 $430,000 in 1998, to 
$1.6 million in 1999, to $3.2 million in 2000, to $7.8 million in 2001 
and to $11.0 million in 2002, through November. 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.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 339

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Arrow Excise Tax 
     Simplification Act of 2003''.

     SEC. 2. SIMPLIFICATION OF EXCISE TAX IMPOSED ON BOWS AND 
                   ARROWS.

       (a) Bows.--Section 4161(b)(1) of the Internal Revenue Code 
     of 1986 (relating to bows) is amended to read as follows:
       ``(1) Bows.--
       ``(A) In general.--There is hereby imposed on the sale by 
     the manufacturer, producer, or importer of any bow which has 
     a draw weight of 30 pounds or more, a tax equal to 11 percent 
     of the price for which so sold.
       ``(B) Archery equipment.--There is hereby imposed on the 
     sale by the manufacturer, producer, or importer--
       ``(i) of any part or accessory suitable for inclusion in or 
     attachment to a bow described in subparagraph (A), and
       ``(ii) of any quiver or broadhead suitable for use with an 
     arrow described in paragraph (3),

     a tax equal to 11 percent of the price for which so sold.''.
       (b) Arrows.--Section 4161(b) of the Internal Revenue Code 
     of 1986 (relating to bows and arrows, etc.) is amended by 
     redesignating paragraph (3) as paragraph (4) and inserting 
     after paragraph (2) the following:
       ``(3) Arrows.--
       ``(A) In general.--There is hereby imposed on the sale by 
     the manufacturer, producer, or importer of any arrow, a tax 
     equal to 12 percent of the price for which so sold.
       ``(B) Exception.--The tax imposed by subparagraph (A) on an 
     arrow shall not apply if the arrow contains an arrow shaft 
     subject to the tax imposed by paragraph (2).
       ``(C) Arrow.--For purposes of this paragraph, the term 
     `arrow' means any shaft described in paragraph (2) to which 
     additional components are attached.''.
       (c) Conforming Amendment.--The heading of section 
     4161(b)(2) of the Internal Revenue Code of 1986 (relating to 
     arrows) is amended by striking ``Arrows.--'' and inserting 
     ``Arrow Components.--''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to articles sold by the manufacturer, producer, 
     or importer after December 31, 2003.
                                 ______