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RECREATIONISTS HAVE ALREADY BEEN TARGETED FOR NEW, 

 TRUE USER FEES 



One other thought in that area: The folks we consider "users" of our products, when 

 they're used on a trail — hikers, backpackers, climbers, canoeists - have already been 

 targeted for more, true user fees — through the recently passed omnibus appropriations bill 

 and through HR 2107, a bill recently approved by the House Resources Committee. These 

 fees will hit only recreationists, and recreationists will see direct, identifiable services for 

 these fees — on the ground where they paid them. Unlike the proposal being discussed 

 today, the dollars will follow the user to the agency and facilities that they use. Hopefully 

 those users will see the new fees as a reasonable cost of participating the in the outdoor 

 activities they've chosen. I think this committee should carefully consider whether the same 

 group should also be targeted for a new tax for wildlife programs. 



SUPPORTERS HAVE UNDERESTIMATED THE HIDDEN COSTS THIS 

 PROGRAM MAY HAVE FOR AFFECTED BUSINESSES AND 

 CONSUMERS. 



As I mentioned earlier, we have small margins in this business, and consumer behavior can 

 change based on just a slight change in price. Our experience tells us it is entirely possible 

 that the consumer will be paying a great deal more for this tax than the Treasury is taking 

 in. Once you take into consideration the manufacturer's costs associated with administering 

 the tax and the way products are marked up from one level to the next to cover costs up the 

 line of commerce, the consumer could be paying double or quadruple the amount actually 

 going to the program. We believe these increased product costs will result in shifts in 

 consumer behavior and decreased sales. None of these costs, including the tax, will appear 

 on a store receipt The cost to the public would be largely hidden. 



This is not an efficient tax collection method, and we would also note that it does not mesh 

 with the "visibility" principal of the National Commission on Economic Growth and Tax 

 Reform — that is, to have taxes and costs of government be visible. That Commission 

 called value-added taxes and manufacturer's excise taxes the "least visible taxes of all." 



THIS TAX CREATES WINNERS AND LOSERS 



Because it is difficult to pinpoint wildlife-dependent recreationists by the products they use, 

 the tax proposal creates artificial winners and losers. For example, many bird watchers 

 watch birds in running or rugged walking shoes. Those are unlikely to be taxed and could 

 be the beneficiary if hiking boot prices increase because of this tax. In addition, higher-end 

 (and higher quality) products in each taxable category would probably suffer. 



While supporters of the initiative say there will be no competitive disadvantage because all 

 camp stoves, or all tents, will be taxed, taxed products will be competing for consumer 

 dollars with other, untaxed products. One Mountainsmith example: Emergency Medical 

 Technicians purchase large amounts of our gear every year, as do photographers and 

 videographers. Because the expedition packs used for these other purposes are very 

 expensive, the increase in costs to these special consumers would dramatically increase. 

 Mountainsmith could very likely lose this market to bag manufacturers that are untaxed 

 because their product is not a "backpack". 



