Ag Transportation Coalition Outlines Freight User Fee Principles
Ag Transportation Coalition Outlines Freight User Fee Principles
Who will pay for freight infrastructure? This has become an increasingly urgent question for businesses as well as policy makers. The Agriculture Transportation Coalition (AgTC) recently developed a list of freight user fee principles in response to an inquiry from members of Congress.
To be workable for agricultural producers and businesses, it is critical that any freight user fee be value-based - not per container – because agricultural cargo tends to be of lower value than imported consumer goods.
The list of principles set forth for discussion by AgTC reads as follows:
1. The fee must be easily and efficiently collected, in a manner which does not administratively burden international trade. The Harbor Maintenance Tax (HMT) is an example of a fee that is efficiently collected. It is a simple, almost automatic process. PierPass is an example of a fee that is inefficiently collected, imposing costs and burdens on international trade.
2. The fee must be transparent. It must be possible to know exactly how much is collected and how much is spent, by whom and on what. The HMT is such an example - CBP discloses the exact amount collected, and OMB can account for exactly how it is spent. PierPass is an example of a fee that is not transparent - we do not know how much is collected or how it is spent.
3. The fee must be spent entirely, and not held back and used to balance the federal budget. The HMT is an example of a fee which is not being spent entirely, as half of annual collections are held in a "trust fund," and never spent for its intended purpose (dredging). The Highway Gas Tax is an example of a fee that is spent entirely (after Congress so mandated).
4. The fee must be spent only on its intended purpose. If Congress creates a freight infrastructure fee and a trust fund to receive the revenues and from which expenditures will be made, then all the monies collected must be spent on freight infrastructure, and not siphoned away to assorted other objectives.
5. The fee amount must be affordable. It must not be too high, and it must reflect the value of the cargo. The importers and other components of the international trade community have opposed the Richardson MOVEMENT Act because it places a huge burden on international trade by tripling the current HMT.
6. The fee burden should be shared as broadly as possible. A fee on all freight entering the U.S. at seaports, airports and border crossings would spread the cost burden widely, without overwhelming any single component of commerce. In contrast, the Richardson bill only imposed the fee on imports (not exports) and only at seaports.
7. International commerce should not bear the entire burden. There is much domestic freight that requires improved infrastructure, and which will use any new infrastructure that is built. It is important to assure that domestic truck and rail shares the burden. If a freight infrastructure fee is imposed on the international arriving freight, shouldn't such a fee also be imposed on domestic movements?
One unresolved question is whether freight user fees should be collected on exports as well as imports. Currently, the HMT is paid on imports but not exports. While importers would like exporters to share the fee burden, Congress must consider whether it is desirable to impose new costs on U.S. exporters. The Supreme Court has ruled that the HMT could not be collected on exports, as it looked more like a tax than a user fee. While some have claimed that a fee collected only on imports would violate WTO rules, the HMT has been collected on imports for more than a decade with no country ever bringing a complaint to the WTO.
If you have any questions regarding these issues, please contact Kevin Smith at 303-623-6328 or ksmith@usmef.org.
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The U.S. Meat Export Federation (www.USMEF.org) is the trade association responsible for developing international markets for the U.S. red meat industry and is funded by USDA, exporting companies, and the beef, pork, corn and soybean checkoff programs.
Ag Transportation Coalition Outlines Freight User Fee Principles
Who will pay for freight infrastructure? This has become an increasingly urgent question for businesses as well as policy makers. The Agriculture Transportation Coalition (AgTC) recently developed a list of freight user fee principles in response to an inquiry from members of Congress.
To be workable for agricultural producers and businesses, it is critical that any freight user fee be value-based - not per container – because agricultural cargo tends to be of lower value than imported consumer goods.
The list of principles set forth for discussion by AgTC reads as follows:
1. The fee must be easily and efficiently collected, in a manner which does not administratively burden international trade. The Harbor Maintenance Tax (HMT) is an example of a fee that is efficiently collected. It is a simple, almost automatic process. PierPass is an example of a fee that is inefficiently collected, imposing costs and burdens on international trade.
2. The fee must be transparent. It must be possible to know exactly how much is collected and how much is spent, by whom and on what. The HMT is such an example - CBP discloses the exact amount collected, and OMB can account for exactly how it is spent. PierPass is an example of a fee that is not transparent - we do not know how much is collected or how it is spent.
3. The fee must be spent entirely, and not held back and used to balance the federal budget. The HMT is an example of a fee which is not being spent entirely, as half of annual collections are held in a "trust fund," and never spent for its intended purpose (dredging). The Highway Gas Tax is an example of a fee that is spent entirely (after Congress so mandated).
4. The fee must be spent only on its intended purpose. If Congress creates a freight infrastructure fee and a trust fund to receive the revenues and from which expenditures will be made, then all the monies collected must be spent on freight infrastructure, and not siphoned away to assorted other objectives.
5. The fee amount must be affordable. It must not be too high, and it must reflect the value of the cargo. The importers and other components of the international trade community have opposed the Richardson MOVEMENT Act because it places a huge burden on international trade by tripling the current HMT.
6. The fee burden should be shared as broadly as possible. A fee on all freight entering the U.S. at seaports, airports and border crossings would spread the cost burden widely, without overwhelming any single component of commerce. In contrast, the Richardson bill only imposed the fee on imports (not exports) and only at seaports.
7. International commerce should not bear the entire burden. There is much domestic freight that requires improved infrastructure, and which will use any new infrastructure that is built. It is important to assure that domestic truck and rail shares the burden. If a freight infrastructure fee is imposed on the international arriving freight, shouldn't such a fee also be imposed on domestic movements?
One unresolved question is whether freight user fees should be collected on exports as well as imports. Currently, the HMT is paid on imports but not exports. While importers would like exporters to share the fee burden, Congress must consider whether it is desirable to impose new costs on U.S. exporters. The Supreme Court has ruled that the HMT could not be collected on exports, as it looked more like a tax than a user fee. While some have claimed that a fee collected only on imports would violate WTO rules, the HMT has been collected on imports for more than a decade with no country ever bringing a complaint to the WTO.
If you have any questions regarding these issues, please contact Kevin Smith at 303-623-6328 or ksmith@usmef.org.
###
The U.S. Meat Export Federation (www.USMEF.org) is the trade association responsible for developing international markets for the U.S. red meat industry and is funded by USDA, exporting companies, and the beef, pork, corn and soybean checkoff programs.