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AZ senator blocking archery import tax bill, & will cost 350 Easton Archery jobs

Arizona senator blocking bill that would save 350 jobs

By ROBERT GEHRKE

Associated Press Writer

WASHINGTON (AP) - An Arizona senator is blocking efforts to close a tax loophole that a major archery company says could force it to close its operations in Utah and send jobs overseas.

Easton Outdoors employs about 350 people in its Salt Lake City arrow operation, assembling arrow components and fletching - attaching feathers to the arrow shafts.

Easton's complaint is that the federal government levies a 12.4 percent tax on the components it imports to Utah for assembly, while arrows assembled outside the United States and imported to the country are not taxed due to a loophole in the 1997 law.

Since the law passed, about one-third of the $45 million arrow market has moved its production overseas.

Faced with a threat of Easton closing its doors and moving jobs to Canada or Mexico, members of Congress from Utah and Wisconsin pushed legislation to tax both assembled arrows as well as components.

The House bill, sponsored by Rep. Paul Ryan, R-Wis., and Rep. Jim Matheson, D-Utah, unanimously passed the House earlier this month, but failed to make it through the Senate because Arizona Republican Sen. Jon Kyl blocked the measure.

Kyl's state is home to Precision Shooting Equipment Inc., which already has moved its assembly operations to China and now enjoys the benefit of not paying taxes on its imported arrows.

Erik Watts, CEO of Easton Outdoors, said he has been working for five years to get the provision changed, and the company had threatened to close its Utah operations if the bill didn't pass by the end of the year.

''Jon Kyl is the only one who's allowing the cheaters to continue to cheat,'' Watts said.

Watts said he hasn't moved Easton's operations overseas yet because he is hoping Congress will act quickly to address the discrepancy when members return next month. ''We can't wait any longer,'' he said.

A Kyl spokesman said the senator does not discuss holds he has put on legislation. A spokeswoman for Precision Shooting Equipment said the company would not comment.

Sen. Orrin Hatch, R-Utah, who is backing the measure in the Senate, has met with Kyl to discuss the provision. Hatch was so insistent that the Senate consider the archery bill that he stalled an unrelated and broadly supported bill last month until he got assurances the Senate would take up the arrow tax change.

The measure may be tacked onto a larger tax bill when one comes through the Senate next year.

If Easton moves its assembly outside of the United States it would join a foreign market that has been increasing exponentially in recent years.

In 1997 there was just $857,000 worth of arrow imports to the United States, according to statistics from the U.S. International Trade Commission. In 2002, there was $11.6 million worth of arrow imports, as companies moved their operations overseas to avoid the tax.

Figures for 2003 are not available, but had increased 35 percent over the first six months of 2003 compared to the same period the previous year.

Watts said the tax loophole hurts more than his business.

Under a 1930s law, taxes on fishing tackle, guns and archery equipment go into a U.S. Fish and Wildlife Service fund that makes grants to states for wildlife habitat protection and hunter education projects.

Companies importing their arrows are not supporting those projects, Watts said, and those projects aren't getting the money they otherwise would.

AP-WS-12-22-03 2125EST

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