Michigan Senator Fighting To Stop New Tax On
CLEVELAND--Michigan Senator Spencer Abraham is urging his fellow legislators to oppose the Administration’s proposal to institute a new tax on waterborne commerce in the United States. The so-called Navigational Assistance Tax (NAT) would
charge commercial navigation $176 million a year for such Coast Guard and NOAA functions as Aids to Navigation, Icebreaking and charts. The icebreaking portion of the tax would be borne almost entirely by Great Lakes basin industries as the U.S. Coast Guard performs the vast majority of its icebreaking missions on the Great Lakes.
While the whole Great Lakes basin would suffer from the icebreaking tax, Michigan interests would be particularly hard hit.
Michigan boasts more commercial ports (39) than the other seven Great Lakes states combined. The icebreaking tax would greatly increase the cost of moving Michigan-mined iron ore from the ports of Marquette and Escanaba and Michigan-produced cement from Alpena and Charlevoix. These trades extend well into the Lakes ice season (mid-December to mid-April).
The tax for Aids to Navigation would likewise impact Michigan’s limestone-mining industry. Seven of the eight U.S. stone loading ports are located in Michigan and thus generate the vast majority of the 40 million tons of stone moving on the Lakes..
In letters to the Chairs of key Senate committees, Senator Abraham has stressed that the NAT "will fall almost exclusively upon
commercial shipping, and will place Lake transit of goods and materials, as well as the goods themselves, at relative disadvantage to other modes of shipping, and to other regions’ goods."
Under the Constitution, only Congress has the power to levy taxes. The NAT would be instituted as part of the Coast Guard’s FY99 budget. "I believe is it highly inappropriate to consider fees for Navigational services through the appropriations process," the Senator wrote his colleagues, "and ask that you reject such a proposal."
To prevent institution of the NAT, Senator Abraham is asking his fellow senators to support an amendment to current law that would prohibit the collection of a fee or charge for any navigational assistance service including icebreaking.
Similar efforts to stop the NAT are underway in the House of Representatives. Minnesota Congressman James L. Oberstar has introduced legislation in the House that would preclude any tax for navigational assistance services.
The NAT marks the second time in two years the Administration has tried to institute an icebreaking tax. In 1997, the Administration proposed a $.67 tax per ton of cargo carried on the Great Lakes during the ice season. Senator Abraham was one of 50 Great Lakes legislators in both the House and Senator would opposed the tax. In the face of such opposition, the Administration allowed the proposal to fade away.
"Lake Carriers’ Association deeply appreciates Senator Abraham’s’ commitment to the continued vitality of Great Lakes shipping," said George J. Ryan, President of the organization representing U.S.-Flag ship operators on the Great Lakes. "The
NAT will increase the cost of moving vital raw materials and either lead to cargo diversions to ports in Canada or a switch to less environmentally-friendly modes of transportation. The NAT is bad public and environmental policy."
Click here to write your Senator and encourage them support an amendment to the current law that would prohibit the collection of a fee or charge for any navigational assistance service