Sportfishing excise tax. Have rod prices fallen?

[Farmer Bob]

The sport fishing excise tax law changed on Sept 30th. With the old rules there was a 10% tax on all fishing gear over $100. So a $600 fly rod included a $55 tax, its pre tax value was $545. With the new rules the tax is capped at $10 for all gear over $100. So the new retail price of that $600 fly rod should be $555. Have prices come down or are we being quietly ripped off...FB.

[mantis]

First I have heard of this Bob. Thanks for posting. I see you are in NJ so you probably go to the Somerset Show..maybe both of them..Be a good place to find out! Why do I think the price of a $600 rod will still be $600. I have a feeling the rod price will magically have increased exactly the same amount of the lowered tax...Think maybe?

[qrrfish1]

In a word "No", the goverment collects tax. That is the only involvement they have. The market sets the price. Consumers decide either to pay the price or not.

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Captn. Paul Darby

[mantis]

I'm not understanding Paul's post. . When ever I have bought a reel or rod, only the sales tax was added..to the price on the sales slip. That must mean this other tax was already figured in to the , say, $600 tag price of the rod. Is that correct?
So what I am asking in my first post is if the tax that is already figured in is no longer being collected by the government (who else),... shouldn't the rod tag price be that much less? I was wondering if any would be or would they just leave the same price tag on the rod and keep the tax break as a profit. I think that is a legit question.

[LadyFisher]

Here is the article from RodMaker magazine:

"Excise Tax Law Changes
Recent Revision Caps the Tax at $10 per Rod Maximum

Washington, DC
As of September 30th, 2005, a change has been made to the Sportsfishing Excise tax which now caps the tax on any rod at a maximum of $10. The standard method of figuring and paying the tax (RodMaker Magazine Volume 7 #3 or the online library at [url=http://www.rodbuilding.org.:b3b85]http://www.rodbuilding.org.[/url:b3b85] remains unchanged, but the tax is now 10% of the taxable amount or $10, whichever is less.

Because the greatest amount of fishing tackle that is manufactured or imported into the United States sells for far less than $25 at the first point of the sale, the new tax cap isn't really expected to alter the total sum of money collected for the SportsFish Restoration Fund. About the only people who will notice the difference are the buyers of commercial and custom made rods that sell for many hundreds of dollars. Their tax burden will be less, but because such sales make up only a very small percentage of overall fishing tackle sales, the monies returned to the States Fame and Fish Departments from the Restoration Fund won't be affected to any noticeable degree.

Here is the official wording in the bill which was passed and signed into effect in August:

Paragraph (1) of section 4161(a) (relating to sport fishing equipment) is amended to read as follows:

"(1) Imposition of Tax. -

"(A) In General - there is hereby imposed on the sale of any article of sport fishing equipment by the manufacturer, producer, or importer a tax equal to 10 percent of the price for which sold.

"(B) Limitation On Tax Imposed On Fishing Rods and Poles. - The tax imposed by subparagraph (A) on any fishing rod or pole shall not exceed $10."

(b) Conforming amendments. - Section 4161(a)(2) is amended by striking "paragraph (1)" both places it appears and inserting "paragraph (1) (A)".

(c) Effective Date. - The amendments mady by this section shall apply to articles sold by the manufacturer, producer or importer after September 30, 2005.

F:\HWC\109\WM\TITLEXI_001.XML


The second paragraph (B) is the only one that custom builders need to be concerned with. From September 30th, 2005 and on, the tax charged and collected on a custom rod will be capped at a maximum of $10 per rod.

For more information on the tax and how to figure and pay it, please consult the article in RodMaker volume 7 #3 or visit and read the same article in the online library at [url=http://www.rodbuilding.org.:b3b85]http://www.rodbuilding.org.[/url:b3b85] This article contains the rule for figuring the "constructive sales price of a fishing rod" as well as answers other commonly asked questions about the tax. The next issue of
RodMaker will contain a reprint of this article, updated to include the new $10 cap.



[This message has been edited by LadyFisher (edited 18 October 2005).]

[qrrfish1]

First you need to understand were the tax is collected. I mean by that, the point in the supplie chain were the tax was collected. Munufacter, wholesaler, or retailer all add a mark up to the product. The price with tax added changes depending on at what point it was renderd. Then too prodduct that was made and shipped befor the change, even one day befor, was subject to the higher rate of tax and thus would not refect any price change as a consaquence as there was none. The rods that are working there way thru the system under the new tax. May not show up at retail level for some time and then may still show no apparent decress in price. Due to higher cost to produce, ship, handle, ware house, and then sell at every level. The tax was collected only once, most often at the manufatureing level and would have been far less than if it were collected at the retail level. I hope this helps you understand.

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Captn. Paul Darby

[Bamboozle]

When you buy indirectly from a manufacturer; like from a dealer the excise tax is built into the price like any other expense.

If you buy directly from the manufacturer you MAY be charged the excise tax as a separate line item. For example IF you buy a Richardson Fly Box, they will charge you the cost of the box, the excise tax AND sales tax if you live in PA since the law USED to cover "tackle boxes" as well. I know that for a fact since I felt the pinch last year when I bought one. In theory a custom bamboo rod builder could charge you the tax as a separate expense as well although I never got bit yet.

In all cases the tax has to be paid and whether it is directly or indirectly passed on and at what percentage is totally up to the manufacturer. You're paying for it just like import duties, material sales taxes and the like.

[mantis]

Okay, you guys answered B4 I could type this post out. The copy of the law was the last post when I started pecking at this key board...So it is kind of like what they do with gas. We have to wait till the already bought rods were sold before we as customers would see the price of the rod drop by the cut in tax. That answers what I had typed in on this post B4 I sent it and saw Paul's and Bam's reply posts and edited it to include this top part. Thanks.


That is a very nice copy of the law. But I already understand the rulling that no more than $10 will be charged now instead of the percentage.
mmmm. I'm trying to think of how I can make my question simpler....

Okay.. You see a rod for sale.
It has a little tag on it that says $600
Does that price already include the excise tax?

If the answer is yes my question then becomes : With this change in tax will the tag price on that same rod be less reflecting the tax break.?

The reason I think the excise tax is already figured in to the $600 price tag is that: When they write me a bill the only thing added to the $600 is the sales tax. They don't write down and add in another amount below that that says 'excise' tax.
So it must already be included in the tag price.


[This message has been edited by mantis (edited 18 October 2005).]

[This message has been edited by mantis (edited 18 October 2005).]

The tax is figured on wholesale $$$'s. It's the manufacturer that is paying the tax not the dealer.

William

[mantis]

If the mfg pays the tax...I can't imagine that it wouldn't in one way or another be passed on and on until eventually it is the consumer who really covers it.