within the Territory of Alaska, one dollar per ton per annum on net tonnage, custom house measurement, of each vessel. * * * "Ships and shipping: Ocean and coastwise vessels doing local business for hire plying in Alaskan waters, registered in Alaska or not paying license or tax elsewhere, one dollar per ton per annum on net tonnage, custom house measurements, of each vessel." having considered said bill, do hereby recommend that the same do pass. The act of 1899 above referred to, now section 176, Compiled Laws of Alaska, 1933, was passed long prior to the organic act of 1912 creating the Territory of Alaska. Under the said organic act, Congress prohibited the Legislature of the Territory of Alaska from amending, repealing, or in anywise altering certain Federal statutes pertaining to the Territory of Alaska, including the said section 176, C. L. A. 1933. The legislative history of this statute (176, C. L. A. 1933) shows the intention of Congress to impose a license tax upon vessels operating within the Territory of Alaska, which were either registered within the Territory or were not paying a tax elsewhere within the United States. (See 33 Congressional Record, 3301, 59685971, 6168, 6610.) As previously stated, the original act was passed in 1899. Congress amended it in 1900. The first paragraph originally read: Freight and passenger lines, propelled by mechanical power in inland waters and river and lake steamers, etc. The Senate amended this by striking out the words "in inland waters" and inserting "registered in Alaska and not paying license or tax elsewhere." The Senate amended the second paragraph, which read: Ships and shipping: Ocean and coastwise vessels doing local business for hire plying in Alaska waters, $1 per ton, etc. by inserting after the words "in Alaska waters", the words “registered in Alaska and not paying license or tax elsewhere." When the bill went to the House the House committee struck out the Senate amendment. When the bill came up for discussion, Mr. Warner, chairman of the House committee, explained that the Senate amendment would not tax ships that were registered and paid a tax elsewhere, even though they carried freight from port to port in Alaska and that the House committee desired to compel all ships carrying interport freight in Alaska to pay the tonnage tax regardless of where they were registered or what other taxes they might pay. A number of Pacific coast Congressmen including Wesley L. Jones, then a Member of the House and later Senator from Washington, opposed the amendment. Nevertheless, the House adopted it and the bill went to conference. The conferees retained the Senate amendment and the conference report (33 Congressional Record, 6610 and 6637) stated that the effect of the amendment as agreed upon in conference would exempt vessels doing an interport business in Alaska if they were registered and paid taxes outside of Alaska. In the case of the Northern Commercial Co. v. United States (217 Fed. 33), the Circuit Court of Appeals in the Ninth Circuit held with respect to Canadian vessels operating between Canadian ports and ports in Alaska, that the exception in the statute meant not paying a license or tax elsewhere in Alaska, that is, in some other judicial district in Alaska than that in which the enforcement of the tax is sought. The briefs filed in that case disclose that the legislative history cited above was not presented nor discussed either in the trial before the district court nor in the argument on appeal. Thereafter for 21 years no effort was made to enforce the statute in respect to American vessels not registered in Alaska, but paying license or tax elsewhere in the United States. In 1934 a local shipowner with a boat plying on the Yukon River was required to pay the tonnage tax. He then made demand upon the district attorneys in Alaska that all ships carrying freight between Alaska ports be required to pay the tax in accordance with the decision of the circuit court in the Northern Commercial case. When the law was applied to the present transportation conditions in the waters of Alaska, it placed unbearable taxes on many of the ships carrying small cargoes of freight from one port to another in Alaska. Ships well loaded with cargoes from Pacific coast cities to the different ports of Alaska, often pick up a few tons of freight and carry it from one port to another more as an accommodation than for the revenue derived. The result is that under the law as interpreted, these ships must pay a tax of $1 per ton on the ship's tonnage. A number of ships of 1,200 to 3,000 tons, carrying small amounts of freight and bringing a revenue of less than $100 each, must pay the full tonnage tax of $1 per ton. The result will be that those ships simply will not carry any freight between ports and the people of Alaska will be deprived of this service. At present there are many more vessels and larger vessels plying between the United States and Alaska than in 1899 and the transportation facilities have improved steadily to the benefit and advancement of the Territory of Alaska. It is therefore the extreme desire of the citizens and business interests of the Territory that such transporation facilities be not curtailed, but on the contrary improved as rapidly as possible. În 1935 the district attorney in Alaska on the advice of the Department of Justice, for the first time, undertook to enforce provisions of the statute as interpreted in the Northern Commercial Co. case above referred to in respect to American vessels doing a transportation business in Alaska, and not registered in Alaska, regardless of whether taxes were paid there or elsewhere in the United States. These cases are now pending in the courts of Alaska. The records show that practically all of the vessels engaged in transportation between the United States and Alaskan ports are not registered in Alaska, but at some port in the United States outside of Alaska and that such ships are taxed elsewhere in the United States than Alaska. The attempted enforcement of the license tax on the tonnage of such ships places an unnecessary burden on water transportation in and to Alaska contrary to the definite legislative intent hereinabove referred to. Such additional burden will necessarily curtail the transportation facilities within and to the Territory of Alaska and for this reason great numbers of citizens and commercial bodies and business interests within Alaska have urged that the transportation facilities now operating be relieved from this burden of double taxation. The present bill (S. 2254) accomplishes this purpose, by striking out the two paragraphs above mentioned, which impose license tax upon such vessels. By eliminating these two sections Congress will then leave the matter open to the Legislature of the Territory of Alaska to enact such legislation in this regard as may be proper under the present conditions and in view of the present needs of the Territory of Alaska. It is generally claimed that the licensing sections herein referred to become operative in cases of vessels engaged in transportation between Alaskan ports and between canneries and ports within the Territory and that such business is now carried on largely as an accommodation to residents and business interests of the Territory of Alaska. The principal business and revenue is that_of_transportation in interstate commerce between the United States and the Territory. Therefore, because the enforcement of this license provision of section 176, C. L. A., is likely to result in serious curtailment of transportation facilities to and within the Territory of Alaska to the detriment of residents and business of the Territory, and in compliance with the many urgent requests made by the people of the Territory generally for the passage of this bill and the further fact that the interpretation of the law as now applied is contrary to the intent of Congress when it passed the law, and there being no opposition to this legislation, your Committee on Territories and Insular Affairs hereby recommend that this bill S. 2254 do pass. It is recommended that section 2 be stricken from the bill because that is designed to wipe out all obligations, liabilities, and penalties undertaken or incurred in the past. It is thought that such question should be left for determination to the Executive and to the courts. At the suggestion of the Delegate from Alaska it is recommended that a new section be added to be known as section 2 fully preserving the power of the Territorial Legislature of Alaska to impose taxes or licenses, for it is thought that the matter of taxation of vessels engaged in interport business in Alaska should be left to the local legislature for decision since it may be reasonably anticipated that any taxes so imposed by the legislature will be reasonable and in proportion to the amount of revenue derived therefrom. It is highly important that the taxing power of the Territorial legislature over the subject matter be maintained and preserved beyond question. The bill was referred to the Secretary of the Interior for the usual Departmental report thereon. That report is embodied in a letter dated May 17, 1937, addressed to the chairman of the Committee on the Territories, signed by Hon. Charles West, Acting Secretary of the Interior, which reads as follows: Hon. LEX GREEN, Chairman, Committee on Territories, INTERIOR DEpartment, House of Representatives. MY DEAR MR. GREEN: I have for reply your request of May 4 for a report on H. R. 6790, a bill to amend section 460, chapter 44, title II, of the act entitled "An act to define and punish crimes in the District of Alaska and to provide a code of criminal procedure for said district", approved March 3, 1899, as amended. This bill if enacted into law would eliminate the provisions for collecting a Federal license fee from— 1. "Freight and passenger transportation lines, propelled by mechanical power registered in the Territory of Alaska, or not paying license or tax elsewhere, and river and lake steamers, as well as transportation lines doing business wholly within the Territory of Alaska, $1 per ton per annum on net tonnage, customhouse measurement, of each vessel" (31 Stat. 331). 2. "Ships and shipping: Ocean and coastwise vessels doing local business for hire plying in Alaskan waters, registered in Alaska or not paying license or tax elsewhere, $1 per ton on net tonnage, custom-house measurement, of each vessel" (31 Stat. 331). In addition to repealing these provisions for Federal revenue, H. R. 6790 in section 2 would render unenforceable any penalties, forfeitures, or liabilities incurred for failure in the past to pay the licenses required by the two sections quoted above. The schedule of license fees provided in the act of March 3, 1899, supra, as amended June 6, 1900, was intended as a part of a Federal system of taxation for the Territory of Alaska. It was formulated and enacted into law in lieu of a system of property taxes, since at the beginning of the century as at the present time the lands of Alaska were almost wholly in the hands of the Federal Government. By provision of law (32 Stat. 946; 33 Stat. 533; 33 Stat. 616), the moneys collected from these fees are used for the maintenance of public lands, the support of education, and the care of the indigent within the Territory of Alaska. The debate in Congress over the amendments of June 6, 1900, which concerned the language of those paragraphs dealing with licenses for freight and transportation lines and for ships and shipping gives considerable ground for believing that Congress intended "paying a license or tax elsewhere" to exclude vessels paying a license or tax elsewhere than in the Territory of Alaska. Portions of the transactions of Congress and of the debate pertaining to the language of the two sections under question may be found in the Thirty-third Congressional Record, pages 3301, 5577, 5968-5971, and 6637. There has been one adjudicated case bearing upon the interpretation of this language, Northern Commercial Co. v. United States (217 Fed. 33) decided upon appeal in 1914 by the Circuit Court of Appeals for the Ninth District. In this decision it was held the exception "paying a tax or license elsewhere" meant elsewhere within the Territory, or in another judicial district. Proceedings are pending in the court of the First District of Alaska against two of the larger steamship companies of Alaska because of nonpayment of the $1 per ton license fee in the years 1934, 1935, and 1936. My information is that the vessels of these companies are not registered in Alaska and that taxes upon them are paid outside of the Territory. As I interpret the second section of H. R. 6790, its enactment into law would remove all grounds for prosecution. My conclusions after reviewing these facts are: 1. A license fee applying to freight and transportation lines and to ships and shipping doing local business within Alaskan waters is a legitimate source of revenue provided ships paying license or taxes elsewhere than in the Territory of Alaska be exempted, and the law making provision for such license should not be repealed. 2. Consideration may profitably be given to the question of amending the present law in order to remove all question as to the meaning of "or not paying license or tax elsewhere" and to adjust the amount of the license fee which is now fixed at $1 per ton per annum on net tonnage custom-house measurement on each vessel. 3. Sufficient justification has not been presented to justify a blanket dismissal of penalties, forfeitures, or liabilities. H. R. 6790 is similar in intent to S. 1692 concerning which this Department submitted through the Bureau of the Budget an unfavorable report. The Acting Director of the Bureau of the Budget informed me under date of April 19 that such a report was not in conflict with the financial policy of the President. Sincerely yours, CHARLES WEST, Acting Secretary of the Interior. It will be observed that the objection of the Acting Secretary of the Interior to section 2 of the bill designed for dismissal of liability for penalties and forfeitures has been met by the recommendation that the original section 2 by stricken. No objection from any of the people of Alaska to the enactment of this measure has been brought to the attention of the committee, but on the other hand the committee has been informed of a number of telegrams and letters in support of the bill and pointing out the serious curtailment of transportation facilities within the Territory of Alaska to the detriment of the residents of the Territory which will necessarily result from failure to repeal the provisions of the license-tax law of the Territory herein quoted. Hereinafter set out is copy of a telegram recently received by the chairman of the committee from Hon. John W. Troy, Governor of Alaska, urging passage of the bill for the reasons in said telegram stated: Hon. L. GREEN, Chairman of Territories Committee, JUNEAU, ALASKA, June 26, 1937. House of Representatives, Washington, D. C.: I urge the House of Representatives to act favorably on Senate bill 2254 which I understand has already passed the Senate. If this tax is not promptly repealed the steamship companies operating between States and Alaska contemplate refusing to engage in interport commerce in Alaska. The elimination of interport service to avoid interport tax would be a great hardship on the Territory. It would delay business and prevent interterritorial commerce. This is an important matter so far as the people who live and do business in Alaska are concerned. JOHN W. TROY, Governor of Alaska. CHANGES IN EXISTING LAW In compliance with paragraph 2a of rule XIII of the Rules of the House of Representatives, changes in section 460, chapter 44, title II of the act of March 3, 1899, as amended, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, and existing law in which no change is proposed is shown in roman): Tax on business and trades: Any person or persons, corporation, or company prosecuting or attempting to prosecute any of the following lines of business within the Territory of Alaska shall first apply for and obtain license so to do from a district court or a subdivision thereof in said Territory, and pay for said license for the respective lines of business and trade as follows, to-wit: Abstract offices, $50 per annum. Banks, $250 per annum. Boarding houses having accommodations for ten or more guests, $15 per annum. Brokers (money, bill, note, and stock), $100 per annum. Billiard rooms, $15 per table per annum. Bowling alleys, $15 per annum. Breweries, $500 per annum. Bottling works, $200 per annum. Cigar manufacturers, $25 per annum. Cigar stores or stands, $15 per annum. Drug stores, $50 per annum. Public docks, wharves, and warehouses, 10 cents per ton on freight handled or stored. Electric-light plants, furnishing light or power for sale, $300 per annum. Fisheries: Salmon canneries, 4 cents per case; salmon salteries, 10 cents per barrel; fish-oil works, 10 cents per barrel; fertilizer works, 20 cents per ton. [Freight and passenger transportation lines, propelled by mechanical power registered in the Territory of Alaska, or not paying license or tax elsewhere, and river and lake steamers, as well as transportation lines doing business wholly within the Territory of Alaska, $1 per ton per annum on net tonnage, custom-house measurement, of each vessel.] Gas plants, for heat or light, for sale, $300 per annum. Hotels, $50 per annum. Halls, public, $10 per annum. Insurance agents and brokers, $25 per annum. Mines: Quartz mills, $3 per stamp per year. Merchantile establishments: Doing a business of $100,000 per annum, $500 per annum; doing a business of $75,000 per annum, $375 per annum; doing a business of $50,000 per annum, $250 per annum; doing a business of $25,000 per annum, $125 per annum; doing a business of $10,000 per annum, $50 per annum; doing a business of under $10,000 per annum, $25 per annum; doing a business of under $4,000 per annum, $10 per annum. Meat markets, $15 per annum. Manufactories not enumerated herein, same classification and license charges as mercantile establishments. Physicians, itinerant, $50 per annum. Planing mills, $50 per annum when not part of a sawmill. Pawnbrokers, $300 per annum. Peddlers, $25 per annum. Patent-medicine venders (not regular druggists), $50 per annum. Railroads, $100 per mile per annum on each mile operated. Restaurants, $15 per annum. Real estate dealers and brokers, $50 per annum. [Ships and shipping: Ocean and coastwise vessels doing local business for hire plying in Alaskan waters, registered in Alaska or not paying license or tax elsewhere, $1 per ton per annum on net tonnage, customhouse measurements, of each vessel.] Sawmills, 10 cents per thousand feet on the lumber sawed. Steam ferries, $100 per year. Toll road or trail, $200 per annum. Tobacconists, $15 per annum. Tramways, $10 for each mile or fraction thereof per annum. Transfer companies, $50 per annum. Taxidermists, $10 per annum. Theatres, $100 per annum. Waterworks, furnishing water for sale, $50 per annum. O |