Fix the tax that sends our shipping to Canada
Story problem. Calculators allowed.
One cargo ship pulls into the port of Prince Rupert in British Columbia carrying 5,000 Chicago-bound freight containers.
Another ship of like size pulls into the Port of Tacoma carrying 5,000 Chicago-bound containers.
All things being equal, Tacoma is a tough competitor for that shipping business. But all things are not
The U.S. government imposes a 0.125 percent “harbor maintenance tax” based on the value of the Tacoma cargo; the HMT averages about $109 per container. There’s no such tax on the Canadian cargo.
You are the shipper. Multiply 5,000 times $109; add the sum to the cost of a Puget Sound shipment. Which port do you pick — Tacoma or Prince Rupert?
With Canada aggressively expanding its ports to compete with Tacoma and Seattle, that $545,000 difference has become a magnet diverting hulls from Puget Sound northward toward Prince Rupert and Vancouver.
The real-world difference can be much higher if the containers are full of electronics, shoes or other high-value cargo. The HMT — originally designed to help keep American harbors operable — is now a major competitive disadvantage to Puget Sound maritime commerce.
Washington’s U.S. senators, Patty Murray and Maria Cantwell, propose to change things. They’re soon to introduce a bill that would collect the import tax on cargo entering the United States not only by sea, but also by land.
In other words, overseas shippers who dodge the current HMT by unloading their cargo at Prince Rupert or Vancouver, then railroading it to Chicago, would pay for its crossing of the U.S. northern border.
That would help restore Puget Sound’s competitiveness in the face of Canada’s aggressive grab for Pacific Rim shipping.
The Maritime Goods Movement Act for the 21st Century wouldn’t stop there. The Murray-Cantwell bill would also address another perversity of the harbor maintenance tax: The fact that deepwater ports, including Tacoma and Seattle, get almost nothing in return.
Half the HMT proceeds aren’t spent on port improvements at all; Congress spends them on other priorities. Of the other half, a disproportionate share is spent dredging waterways that are constantly getting silted up. Louisiana alone gets about a fifth of the money; Tacoma and Seattle barely get back a penny on the dollar.
The bill would, among other things, spread the money around more fairly; Puget Sound ports would get a much bigger share to spend on improvements they need.
The proposal is well-named. Everything about the U.S. harbor maintenance tax — how it’s collected, how it’s spent, where it’s spent — reflects circumstances that have long since changed. America’s deepwater ports must adapt to compete in the 21st century. They can’t do that with the federal government working against them.
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