27 



Now, the manufacturer sold the boots for $52.50, and if the 

 wholesaler's markup is 100 percent, that means that the whole- 

 saler now has a $50 pair of boots which he marks up to $105. He, 

 in turn, passes the boots along to the retailer, who has, let us just 

 say for the sake of discussion, a 100 percent markup, who now 

 marks up his cost which is $105, and the product ends up being 

 $210. 



And so in order for us to collect a $2.50 tax to give to "Teaming 

 with Wildlife," we are asking the consumer under this scenario to 

 pay $210 for the boots, which doesn't make a lot of sense to me, 

 quite frankly. Maybe you can clear that up for me or respond to 

 it? 



Mr. Mallman. Well, it is hard to clear up, Mr. Chairman. It is 

 one of the areas that when we decided to endorse this initiative 

 that we had to struggle with, and right now the consensus is that 

 this user fee will have to be isolated. In other words, when we sell 

 a given product, there will be a cost of the product and transpor- 

 tation. And then isolated on the invoice will be this fee, and that 

 fee will be added separately and not be subject to the distributor 

 markups. 



Several of the distributors we have talked to said that, yes, they 

 could handle that. I can't say they are real excited about it. There 

 are other issues that come into play such as price points and things 

 like this, but it doesn't seem to be insurmountable. There is me- 

 chanics that have to be ironed out. This is a very, very complicated 

 proposal. 



Ajid I can't speak for other industries, but from our standpoint, 

 we see it as workable, and we see it as one that can be prevented 

 from being increased with the distributor and the wholesaler and 

 the retailer adding on their cut. 



Mr. Mac Donald. If I could add something to this, as a company 

 that has a retail side and a wholesale side, and it is a carrier of 

 many of the products that work in wildlife restoration and 

 sportsfish restoration, and I think I would like to go back to that 

 because as you talk to manufacturers that work with things that 

 are under wildlife restoration and sportsfish restoration, they don't 

 see it as a burden because they see the benefit that comes back to 

 them. 



And when it comes to us, it comes in the manufacturer's price, 

 and it is not priced and increased at each particular level related 

 to that. It comes in the base product, and that levy is only once 

 as I understand the retail component. 



Mr. Saxton. We are going to have to go vote here shortly. Let 

 me just ask the second part of this question, and that is why didn't 

 we just ask the retailer to send in the $2.50 and then use that as 

 the percentage of the user's fee? 



Mr. Mac Donald. Well, the explanation that I use for that, I al- 

 most call it like a port of entry, and it is almost like a trunk of 

 a tree and the leaves on a tree. You are consolidated and have 

 fewer of the entities at the manufacturing level. It is simpler to col- 

 lect it at that particular level than it is to try to get it when it is 

 out into that system — to all the leaves and that sort of thing. 



It is a simpler system, and it is a system that has been proven 

 to work with — because it is the same system used for Pittman-Rob- 



