Paying for harbor maintenance in the US: Options for moving past the Harbor Maintenance Tax: Fid-Bau Portal

Paying for harbor maintenance in the US: Options for moving past the Harbor Maintenance Tax

McIntosh, C.R. / Wilmot, N.A. / Skalberg, R.K.

Highlights • US Harbor Maintenance Tax (HMT) is a flawed cost recovery mechanism. • Statistical analysis reveals user fees are unlikely to be an effective replacement. • Abolishment without replacement would not be budget neutral. • A small increase in the federal fuel excise tax could cover costs. • It may be difficult politically to pass a fuel tax increase.

Abstract The Harbor Maintenance Tax is a fundamentally flawed maintenance funding mechanism for the critical US port system. Three alternatives were analyzed. User fee rates were estimated for either a national or regional tonnage based fee. Our results indicate that maintenance cost recovering regional fees could vary widely from about 10cents per tonne to nearly 80cents per tonne. A national rate would be about 30cents per tonne. The large regional differences and affects on bulk shippers are likely to make implementing and maintaining cost recovering tonnage based fees infeasible. Two other mechanisms are considered. One possibility is to abolish the HMT without a replacement mechanism. The obvious strength of this approach is its simplicity, the weaknesses is that it is not budget neutral. Another possibility is to increase the federal diesel tax rate. One strength of the approach is the reasonable rate increase required to recover port maintenance costs (estimated between 0.278 and 0.315cents per liter). An additional strength is that relatively inefficient fuel users will either make the largest share of the additional payments or the freight will shift modes to one that is more efficient. One weakness is that the rate has been unchanged since 1997, this points to the political difficulty involved in passing such a rate increase.