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March 1, 2000

Washington Watch - Piling on More Section 31 Relief

By William Hoffman

A House Commerce subcommittee agreed in mid-February to amended Section 31 fee legislation, capping both the overall sum and the rate at which the fee can be collected.

The amended legislation seeks to meld the provisions of two pending House bills. New York Republican Rep. Rick Lazio's H.R. 2441, the Fairness in Securities Transactions Act, proposed a cap of 1/500th of one percent on the fees collected. Currently, the fee is collected at a rate of 1/300th of one percent.

Rep. Vito Fossella's H.R. 1256, the Savings and Investment Relief Act, would phase in a cap on the total volume of Section 31 fees.

The amended bills adopts Lazio's 1/500th of one percent approach. Fossella's amendment contains an option to lift that cap, if collections fail to meet the budget requirements determined by Congress for the SEC. The amendment also requires that collections in excess of a baseline established by the Congressional Budget Office for the SEC budget, be credited to an account for future appropriations.

According to a Feb. 16 press release from Fossella's office, the CBO projected that a 1/500th of one percent fee would raise $486 million in 2001. Section 31 fees are expected to raise $622 million this year while the SEC's budget is $463 million.

SEC fees currently raise $1.7 billion annually. Only a portion of that is budgeted back to the SEC.

The bill may be "fine-tuned as it moves through the legislative process," the Fossella release said.

Fossella called the Section 31 fee "an unrelenting tax on investors and capital. [see Washington Viewpoint, page 16].