The Proposed Federal Freight Fee: A New Tax on Imports and Exports?

It appears that the Harbor Maintenance Fee isn’t enough. Last week, the National Surface Transportation Policy and Revenue Study Commission released a report to Congress that recommends a Federal freight fee to help finance freight-related improvements. In conjunction with that report, Rep. Ken Calvert, R-Corona plans to introduce federal legislation that would impose a maximum $500 tax on all cargo shipments moving through U.S. ports of entry.

The proposed tax is 0.075 percent levied on the value of each shipment imported or exported through the nation’s 300 ports of entry, which includes ocean ports, airports and border crossings. The proposal puts a $500 maximum tax per shipment, which means the maximum of $500 would be applied to any single shipment over $6,600; however, the details of what constitutes a single shipment have not been determined. The tax could raise $3 billion to $5 billion per year to finance freight-related improvements for seaports, airports and border crossings within 300 miles of the port of entry. Calvert’s plan calls for the taxes to be used within 300 miles of the port they are collected and used only for goods-movement related projects. The plan sunsets in 10 years.

There is a minor detail that the Congressman may have overlooked related to the constitutionality of imposing a tax on exports. Many of you may remember the controversial issue over the application of the Harbor Maintenance Tax (HMT) to exports. Article I, Section 9, Clause 5 of the United States Constitution states that “no Tax or Duty shall be laid on Articles exported from any State.” On March 31, 1998, after a lengthy court battle, the, the Supreme Court ruled the application of the Harbor Maintenance Tax to exports was an unconstitutional tax on exports in violation of the Export Clause. Given the history of the HMT, it doesn’t look like Rep. Calvert’s plan to impose the Federal freight tax on exports would pass muster. Once again, the importers would foot the bill for these improvements.

Currently, Calvert does not have the support of key transportation sectors such as retailers and the railroads. With the increased costs of transportation and the unfairness of burdening the importing community with another tax, it will be interesting to see how much support importers and exporters provide.

Voice your opinions for or against this plan by contacting Rep. Calvert and your state representatives!