Here's a bit of good news:

Fly-Fishing Gets
Big Tax Break
In Highway Bill
By CHRISTOPHER CONKEY
Staff Reporter of THE WALL STREET JOURNAL
August 3, 2005; Page D5

The fly-fishing lobby has hooked a big one: the highway bill.

Lurking deep within the six-year, $286 billion measure awaiting President Bush's signature is a provision that would tweak the excise tax imposed on fishing-rod manufacturers, capping what currently is a 10% levy at $10 per product.

Most rods are mass-produced in Asia and generally sell for less than $100, so the levy on them won't fall. The provision will benefit domestic makers of higher-priced models used by fly- and saltwater-fishing enthusiasts.


Many of the highest-quality rods, which typically sell in the $350 to $600 range, are still hand-made by small companies such as Scott Fly Rod Co. of Montrose, Colo. Certain old-fashioned models, such as the split-cane bamboo rods made by J.D. Wagner Rods of Parma Heights, Ohio, are produced in home shops and can cost 10 times as much. Having the excise tax reduced to $10 a rod, regardless of the price, will provide significant savings to these specialty makers.

Two Republican lobbyists who fought for the tax break over the past four years were delighted. "This was a labor of love," said Jim Range, a Washington attorney and conservationist who represents the American Fly Fishing Trade Association. Mr. Range, former chief counsel to then Senate Majority Leader Howard Baker, has fished with many legislators at the annual Congressional Casting Call, an event held each April where politicians fly fish for shad in the Potomac River.

His partner in the effort was Rod DeArment, a former chief of staff to Bob Dole when he was Senate majority leader. The men worked together to push through pillars of the Reagan agenda -- tax cuts in 1981 and the last big reform of the Social Security system in 1983 -- but also were allies in a little-noticed 1984 law that placed excise taxes on fishing gear and some motor fuels into a trust fund that sponsored state programs to clean up rivers and improve fishing ecosystems.

Mr. Range says sport-fishing manufacturers lobbied for the 10% excise tax in 1984, hoping the federal government would fund local efforts to preserve the habitats on which their businesses depended. At the time, most fishing gear was made in the U.S., so the tax didn't exacerbate the gap between foreign and domestic rods as it does now.

Several fishing-gear manufacturers said the tax break will provide relief to what is a high-cost, low-margin industry. "I don't think you'll see any manufacturers laughing all the way to the bank," says Jim Bartschi, president of Scott Fly Rod.

The Joint Committee on Taxation estimates that the break will siphon $4 million away from cleanup efforts next year, and $55 million over ten years. However, the restoration fund will increase to $570 million a year thanks to other changes in the highway bill.

Affluent fly-fishing Americans aren't the only folks on the sidelines celebrating the highway bill's passage. An additional provision exempts custom gunsmiths who make fewer than 50 guns a year from a federal firearms excise tax.

I just went thru my 3d audit since 2000, if you have a tax exempt number they automatically check you every 2 years. The first 2 were just with the local agents but this last one went way up the ladder and everything checked out okay. I received a survey form from the IRS about how could they make it easier on the business being audited.I would sure like to see it made $10.00 a rod across the board. Jesse

I've been following this closely. This won't be good news if it reduces the amount of funding in the Sport Fish Restoration Fund. However, most fishing rods sold in the U.S. are not high ticket items - usually selling for far less than $100. At the first point of sale, many if not most of them sell for less than $15. This is where the bulk of the monies on rods come from, not custom or even high end commercially made rods. Most reels and certainly most lures also have a first point of sale that is substantially lower than $100. So the reduction on first point of sale items above $100 ($160 for custom builders) isn't likely to have a huge impact on the fund. And that's the best news.

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Excise Tax On Domestic Fishing Rods Tom I thought this tax also included boats, boat motors, flies for fly fishing or an thing that had to do with water sports. Unfortunately I believe the money the state of Washington gets from the Feds. goes in to their GENERAL FUND (I maybe wrong0
Good Wraps Bob

No, the money each state gets goes into their Fish and Game or Wildlife Department budgets. It is illegal to place it into any sort of general fund monies. As far as what your state Wildlife Department does with it, however, is up to them (you).

Yes, the expansion of the bill some years ago brought boats and motors and other marine items into the fold as well. But what we'd be talking about here is the actual change in tax on some fishing items. Because the vast majority of items sold for fishing use - rods, reels, lures, flies, vests, line, floats, sinkers, hooks, etc., are usually small ticket items, they won't really be affected and thus, hopefully, the fund won't be reduced.

If the bill is signed into law, then custom builders would see a small break given to their customers (the customer pays the tax, not the builder) on rods that sell for over $160 to the end user, or rods that are sold for to a reseller for more than $100. Any amount over those would simply incur a $10 tax.
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Edited 1 time(s). Last edit at 08/03/2005 02:03PM by Tom Kirkman.

Does the 60% rule still hold (tax figured as 10% of 60% of the selling price)??

Mike

Yes.

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