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House Ways and Means Subcommittee on Oversight Chairman Charles Boustany, Jr, MD (R-LA) and Subcommittee on Select Revenue Measures Chairman Pat Tiberi (R-OH) today announced the Subcommittees will hold a hearing on harbor maintenance funding and maritime tax issues, with a focus on the Harbor Maintenance Trust Fund and Harbor Maintenance Tax, maintenance underfunding, and the tax treatment of foreign shipping operations. The hearing will take place on Wednesday, February 1, 2012, in Room 1100 of the Longworth House Office Building, beginning at 9:30 A.M.
In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing. A list of invited witnesses will follow.
The Harbor Maintenance Trust Fund (HMTF) provides funds for the United States Army Corps of Engineers (Corps) to dredge federally maintained harbors to their authorized depths and widths. The HMTF is funded by the Harbor Maintenance Tax (HMT), under which certain users of U.S. coastal and Great Lakes harbors pay a tariff of $1.25 per $1,000 in cargo value passing through these waters. The tax applies to imported and domestic waterborne cargo, as well as the ticket value of cruise ship passengers.
The tax was intended to provide a sufficient, stable long-term source of funding to pay for harbor dredging to maintain authorized depths and widths. In recent years, HMTF expenditures have remained flat while HMT collections have increased with rising imports, creating a large surplus in the trust fund. The HMTF’s uncommitted balance continues to grow and reached an estimated $6.1 billion at the beginning of fiscal year 2012. In fiscal year 2010 alone, $1.2 billion in Harbor Maintenance Taxes were collected, while only $793 million was spent on dredging and related maintenance. Despite the accumulating balances in the HMTF, many U.S. harbors are under-maintained, resulting in the full channel dimensions of America’s busiest ports available less than 35 percent of the time. Reduced channel dimensions could increase both the cost of shipping and the risk of grounding or collision.
Another potential concern with the structure of the HMTF arises with respect to what is known as “short sea shipping.” Some have argued that the HMT itself is a major reason why very little non-bulk commercial cargo is transported using inland and coastal waterways. Currently, the use of short sea shipping, which involves the movement of cargo along coastal and inland waters, is primarily limited to bulk cargo while commercial non-bulk cargo is moved throughout the U.S. via other modes of transportation
Finally, and unrelated to the HMTF, U.S. shipping companies must maintain investments in qualified shipping assets made between 1975 and 1986 to avoid subpart F (anti-deferral) tax treatment for their qualified foreign shipping income. Some have questioned whether this requirement with which U.S. shipping companies must comply has encouraged these companies to invest capital in their foreign operations – capital that otherwise could have been used to expand domestic operations and to create U.S. jobs.
In announcing the hearing, Chairman Boustany said, “Our nation’s harbors are a lifeblood of commerce. Years of chronic underfunding have severely limited ship traffic, prevented valuable cargo from moving efficiently, and adversely affected national, regional, and local economies. Funds collected by the HMTF should be utilized promptly and exclusively to keep our harbors open for business. The Subcommittees will conduct oversight of this critical problem and consider what solutions might better help American goods to compete in the global economy.”
Chairman Tiberi added, “The U.S. maritime industry is vital to our economy and national security. Today’s tax code places preference on investment in foreign shipping operations over investment in domestic operations. The tax code also discourages the use of local shipping channels as a means to move non-bulk cargo throughout the United States and the Great Lakes region. The Subcommittees should examine how to design tax policies that help create U.S. maritime jobs and that ensure the long-term growth of the domestic maritime industry.”
FOCUS OF THE HEARING:
The hearing will examine the structure of the Harbor Maintenance Trust Fund and the Harbor Maintenance Tax, with an emphasis on investigating whether the structures of the Trust Fund – including both its financing source and the expenditure of its balances – are appropriately structured. Similarly, the hearing will consider whether U.S. anti-deferral rules inhibit the expansion of the U.S. shipping industry.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms. From the Committee homepage, https://waysandmeans.house.gov, select “Hearings.” Select the hearing for which you would like to submit, and click on the link entitled, “Click here to provide a submission for the record.” Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word document, in compliance with the formatting requirements listed below, by the close of business on Wednesday, February 15, 2012. Finally, please note that due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call (202) 225-1721 or (202) 225-3625.
The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, but we reserve the right to format it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response to a request for written comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.
1. All submissions and supplementary materials must be provided in Word format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official hearing record
2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.
3. All submissions must include a list of all clients, persons and/or organizations on whose behalf the witness appears. A supplemental sheet must accompany each submission listing the name, company, address, telephone, and fax numbers of each witness.
The Committee seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations, please call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four business days notice is requested). Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.
Note: All Committee advisories and news releases are available on the World Wide Web at http://www.waysandmeans.house.gov/.