Commercial Maritime Industry

To support the country's maritime infrastructure, federal agencies are allowed to levy assessments--user fees, taxes, and other charges--upon the commercial maritime industry. There are now 124 assessments imposed on the industry. One of these assessments is the harbor maintenance fee, which funds virtually all dredging of U.S. ports. Last year, the Supreme Court ruled that the harbor maintenance fee violated the constitutional provisions of taxes imposed on exports. The import portion of this fee is being challenged by the European Union. The administration has proposed an alternative, cost-based user fee that would be assessed on commercial vessel operators. This suggestion has proved especially controversial with the commercial maritime industry, which contends that it is already burdened with heavy fees and taxes. This report provides a comprehensive summary of the assessments now levied on the commercial maritime industry.

GAO noted that: (1) eleven different federal agencies levy assessments on the commercial maritime industry; (2) in fiscal year (FY) 1998, the agencies collected almost $22 billion; (3) the Customs Service collected by far the largest portion, almost $21 billion; (4) the 10 other agencies each collected an average of $90 million in FY 1998; (5) total collections have increased from $18.2 billion in FY 1991 to $21.8, $21.9, and $21.9 billion in fiscal 1996, 1997, and 1998, respectively, though the amounts for some individual assessments increased or decreased; (6) in all, federal agencies levy 124 different assessments; (7) in FY 1998, shippers paid about $20 billion of the total, vessel owners and operators paid about $1 billion, and various other parties paid the rest; (8) about $20 billion of the total generated in FY 1998 was not earmarked for specific purposes and was deposited in the General Fund of the U.S. Treasury; (9) another $995 million was credited to agency accounts as reimbursement for services provided and the remaining $762 million was deposited into three trust funds to be appropriated in future years to agencies for designated services; (10) two new assessments are being proposed; (11) the proposed Harbor Services User Fee legislation, the largest of the two, is being proposed by the administration as a replacement for the existing Harbor Maintenance Tax; (12) the administration believes that the replacement fee, estimated to generate $980 million annually, is needed to fund federal channel and harbor projects; (13) unlike the Harbor Maintenance Tax, which is paid by either the shippers, foreign trade zone users, or operators of the vessel, the proposed fee would be paid only by vessel operators; (14) the remaining proposed assessment is being proposed by the National Oceanic and Atmospheric Administration; and (15) data provided by the Army Corps of Engineers show that at projected future revenue and expenditure levels, the surplus in the Harbor Maintenance Trust Fund will continue to grow well into the next decade.