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Harbor tax hurts Port of Tacoma every which way

Post by TNT Editorial Board / The News Tribune on Oct. 31, 2011 at 6:34 pm |
November 1, 2011 12:04 pm

This editorial will appear in Tuesday’s print edition.

The Port of Tacoma faces some tough challenges, the biggest of which – the global economy – is beyond anyone’s control.

But one of its problems could be fixed relatively easily by Congress. A perverse federal harbor fee puts both Seattle and Tacoma at a disadvantage compared to the ports of Vancouver and Prince Rupert in British Columbia. U.S. Rep. Dave Reichert, R-Auburn, has been looking at a legislative solution; we hope he’ll act soon.

The fee in question is the Harbor Maintenance Tax, .125 percent of the value of cargo imported through U.S. ports. Port of Tacoma officials estimate that it adds an average of at least $150 to the cost of every container unloaded in Puget Sound. Canada imposes no such tax, and the $150 or more that shippers save by going through British Columbia amounts to a big penalty against Tacoma and Seattle.

The tax – and the fund it sustains – is fraught with irrationalities.

The money is supposed to be spent dredging harbors and channels. But Congress dithers about when and how to spend it. The Harbor Maintenance Trust Fund now has a surplus of almost $6 billion, yet – out in the country’s harbors – there’s an enormous backlog of dredging work that hasn’t been done.

When the money is spent, the people who pay tend not to be the people who get. High-volume ports subsidize dredging in harbors that handle very little shipping. Expensive maintenance is done, for example, on the Lake Washington Ship Canal, which chiefly serves pleasure boaters exempt from the Harbor Maintenance Tax.

The fund also creates a massive transfer of revenue from deep-harbor ports – such as Seattle and Tacoma, which need little dredging – to shallower harbors that need frequent dredging. A fifth of all expenditures are spent in a single state, Louisiana.

According to the Congressional Research Service’s report, Seattle and Tacoma get “just over a penny for every dollar” their shippers pay in harbor maintenance taxes.

The politics of these cross-subsidizations are complex: There’s not much chance Congress will enact a policy under which each port pays its own way.

What Congress can do is erase the unfair advantage it has given Canadian ports over their American competitors. This would be achieved by imposing the equivalent of the Harbor Maintenance Tax on international cargo passing from Canada across the U.S. border.

Overseas cargo headed for the United States by railroad or highway would pay its fair share; Vancouver and Prince Rupert would thus lose the artificial benefit they get from the Harbor Maintenance Tax.

Reichert – as the sole Republican representing Western Washington in Congress – is the logical person to shepherd the overland fee through the GOP-dominated House of Representatives. Given that Tacoma and Seattle get such a pitifully small benefit on a tax that hurts them so much, Congress owes them this recompense.

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