The policy is contained in section 936 of the Internal Revenue code, which is known as the "possessions tax credit." Section 936 give a tax incentive to U.S. companies which establish industries and provide jobs in the U.S. insular territories located in the Pacific and the Caribbean.
In America Samoa, this tax incentive has helped establish a tuna canning industry which, together with its supporting industries, employs more than 4,000 people. A new modern garment project has also been launched in our territory, and we hope to attract even more new businesses in the years ahead.
Unfortunately, the Congress has recently voted, over the objection of President Clinton, to repeal the incentive contained in section 936. Congress did allow a 10-year transition period for the Pacific territories, which will help American Samoa maintain its existing industries. The bad news is that Congress left no incentive for the attraction of new investment or for the creation of additional jobs.
Despite this setback from the Congress, President Clinton has not given up on the effort to lift the economies of the insular territories. He has announced his continued commitment to restore a genuine tax incentive for new investment and job creation. The president's proposal is carefully designed so that it will not be a vehicle for tax avoidance by corporations.
We remain confident that the issue of economic development incentives for the insular areas will be addressed next year by the Congress. We also believe that there are many members of Congress in both parties who understand our needs and who will support reasonable and responsible incentives for new investment and new jobs.
An important factor in next year's consideration of this issue will be the continued leadership of President Clinton, whose support has been clear and steady. We look forward to working with both the president and with the leaders of Congress.
All we ask is an opportunity to overcome the remoteness and limited resources of our islands and to build a productive economy which can support future generations.
A tax incentive for private investment in these insular areas is consistent with President Clinton's philosophy of giving people the tools to raise their economic horizons. With help from the federal government, American Samoa is working to improve the basic health and education of its people. An equally important priority is to expand our private business sector so that our young people will have jobs and our islands will be less dependent on federal programs.