Harbor maintenance tax reform advances with unanimous support

Container ship leaving port
Proponents of SJM 8008 say it will urge Congress to make changes to the harbor maintenance tax which currently hinders Washington State port competitiveness. Photo: hectorgalarza

Legislators and representatives from the business and labor communities are showing strong support for the current Harbor Maintenance Tax (HMT) reform proposal moving through the Legislature, which they say will boost Washington port competitiveness.

Stakeholders say the current tax puts the state at risk of losing valuable market share to Canada.

Following a public comment session on the measure, SJM 8008 passed out of committee unanimously.

The bill’s prime sponsor is State Sen. Maralyn Chase (D-32). The measure was previously introduced last session but stalled in the Senate. Earlier this month, the Senate approved the measure in a 47-1 vote. It’s companion legislation, HJM 4012, passed out of the House unanimously on Feb. 14 and has been referred to the Senate Economic Development and International Trade Committee.

Under the current tax schedule, HMT charges importers .125% of the value of each container as it enters U.S. ports. On average, the tax increases shipping fees by $109 per container, according to a 2012 Federal Maritime Commission study. Notably, the tax is also estimated to cause 50 percent of shippers to route through Canada instead of the West Coast.

In 2016, this amounted to an additional $74.3 million in fees on goods entering the ports of Seattle and Tacoma.

During a Feb. 22 public hearing in the House Technology and Economic Development Committee, Chase told colleagues: “As much as I love our Canadian friends, they do have a competitive advantage by not having a harbor maintenance tax…

“On the other hand, when you look at what we do on our ports, we charge the Harbor Maintenance Tax which makes shipping into our ports considerably more expensive and makes us noncompetitive,” she said.

Chase added that while the problem is a federal issue, the state Legislature likes to remind Congress every year that Washington is awaiting justice and fairness for the tax.

The legislation would request Congress to reform the HMT to ensure that the nation’s tax policy does not disadvantage U.S. ports, works to fully maintain all navigation channels and better assists HMT donor ports by giving them more benefits for imposing the tax on incoming cargo.

Testifying on SJM 8008 were representatives from the business and labor communities who urged lawmakers to pass the measure.

Mark Johnson, Vice President of Government Affairs for the Washington Retail Association (WRA) said: “We think it’s very important that everybody is given their just do, and Washington right now is getting the short end of the stick.”

He added that many of WRA’s members import hundreds of millions of dollars through the ports of Tacoma and Seattle. “We think this is a needed message to send back to Congress so they are playing fair and giving us what we deserve.”

Sean Eagan, Government Affairs Director for the Northwest Seaport Alliance, spoke to the collaboration among the nation’s ports.

“We’ve been able to successfully negotiate a nationwide agreement between all the ports around the United States for a framework for HMT reform,” he said. “It’s the first time that you’ve got not only the Seaport Alliance but the ports of New Orleans and Mobile and Virginia and others coming in agreement on a way to move forward.”

The next step is to try and merge the proposal into a water resources development bill and work with Congress on finding a solution, he said.

Gordon Baxter, Vice President of the Puget Sound Maritime Trades Council and Lobbyist for the International Longshore Warehouse Union kept his comments brief but testified in support of the proposal, as well.

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