Editorial: Reform the tax that’s hurting Seattle and Tacoma ports

By:  The Seattle Times - Editorial Board
Source: The Seattle Times

A FEDERAL tax is chasing cargo away from Puget Sound to ports in Canada. This is bad federal policy, and Sens. Patty Murray and Maria Cantwell have a bill to correct it.

The bill concerns the harbor-maintenance tax, which was passed in 1986 to help U.S. ports dredge harbors. The tax is 0.125 percent of the value of inbound international cargo, an amount that averages $109 per 40-foot box and can be $200 or more. Outbound cargo is exempt.

The U.S. tax hurts Seattle and Tacoma in two ways. First, it creates an incentive for high-value cargo such as electronics, apparel and shoes to be unloaded at Vancouver or Prince Rupert, B.C. Prince Rupert’s port, opened in 2007, was built to compete with Tacoma and Seattle. Seventy percent of its cargo is bound for points in the United States.

Under the senators’ proposed Maritime Goods Movement Act, the same rate of tax would be paid by marine cargo crossing into the United States by land. Asian cargo unloaded at Prince Rupert for Chicago would become liable for payment when it crosses into Minnesota on the Canadian National Railway.

That would put Seattle, Tacoma, Vancouver and Prince Rupert on equal footing.

The second problem with the harbor-maintenance tax is that Seattle and Tacoma get almost no benefit from it. Half of it has been spent for purposes unrelated to ports — a matter that annoys all the U.S. ports — and the other half is mostly spent on dredging harbors.

The international freight terminals at Seattle and Tacoma don’t need regular dredging. Money collected here is paying for dredging at the East Coast and Gulf ports that plan to attract more Asian cargo through the Panama Canal, when its widening project is completed in 2015.

Our ports deserve some of the money they collect. The Murray-Cantwell bill would set aside 15 percent of the money for deep-water ports that don’t need much dredging, and allow them to use the money for environmental and maintenance work, which could help Puget Sound cleanup efforts. Another 5 percent would be set aside for inland projects.

This is not a partisan bill. It defends our state’s interest, and the national interest. The entire delegation should support it.