Commercial Maritime Industry: Updated Information on Federal Assessments
(Testimony, 11/03/1999, GAO/T-RCED-00-36).
Pursuant to a congressional request, GAO discussed federal
assessments--user fees, taxes, and other charges--levied on the
commercial maritime industry, focusing on: (1) the federal agencies that
levied assessments in fiscal year (FY) 1998 compared with FY 1991, the
number of assessments levied, and the amounts they collected; (2) who
pays the assessments and in which funds they were deposited in fiscal
years 1991-1998; (3) new federal assessments that have been recently
proposed; and (4) the status of the Harbor Maintenance Trust Fund, and
the projected annual balances of the fund.
GAO noted that: (1) 11 different federal agencies levy 124 different
assessments on the commercial maritime industry; (2) these assessments
include fees such as customs duties, ship registry fees, commercial
fishing fees, and inspection charges; (3) in FY 1998, these assessments
totalled nearly $22 billion compared to over $18 billion in FY 1991; (4)
the Customs Service collected by far the largest portion--almost $21
billion; (5) shippers pay the largest portion of the assessments, more
than $20 billion of the total $22 billion; (6) vessel owners and
operators paid about $1 billion, and various other parties paid the
rest; (7) from FY 1991 through FY 1998, the amounts paid by shippers
increased by 17 percent, while the amounts paid by owners and operators
increased by 46 percent; (8) most of the money collected is not
earmarked for specific purposes; (9) about $20 billion of the total
revenues generated in FY 1998 was deposited directly into the General
Fund of the U.S. Treasury; (10) another $995 million was used to
reimburse agencies or private service providers for the services they
provided; (11) the remaining $762 million was deposited into three
federal trust funds to be appropriated in future years to agencies for
designated services; (12) two federal assessments have been proposed;
(13) the administration is proposing a Harbor Services User fee as a
replacement for the existing Harbor Maintenance Tax; (14) unlike the
Harbor Maintenance Tax, which is paid by the shippers, foreign trade
zone users, or operators of the vessel, only vessel operators would pay
the proposed fee; (15) another proposal by the National Oceanic and
Atmospheric Administration would establish a fee for granting permits
for fishing in federally managed fisheries; (16) at the end of FY 1998,
the Harbor Maintenance Trust Fund had a balance of $1.3 billion; and
(17) the balance is projected by the U.S. Army Corps of Engineers to
increase to $2.5 billion in FY 2004.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-RCED-00-36
TITLE: Commercial Maritime Industry: Updated Information on
Federal Assessments
DATE: 11/03/1999
SUBJECT: Import regulation
Harbors
Export regulation
Maritime law
Taxes
User fees
International trade
Government collections
Shipping industry
Marine transportation operations
IDENTIFIER: Customs Service Harbor Maintenance Tax Program
Harbor Maintenance Trust Fund
Customs Service Harbor Services User Fee Program
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO report. Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved. Major **
** divisions and subdivisions of the text, such as Chapters, **
** Sections, and Appendixes, are identified by double and **
** single lines. The numbers on the right end of these lines **
** indicate the position of each of the subsections in the **
** document outline. These numbers do NOT correspond with the **
** page numbers of the printed product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
** A printed copy of this report may be obtained from the GAO **
** Document Distribution Center. For further details, please **
** send an e-mail message to: **
** **
** **
** **
** with the message 'info' in the body. **
******************************************************************
Cover
================================================================ COVER
Before the Subcommittee on Water Resources and Environment, Committee
on Transportation and Infrastructure, House of Representatives
For Release
on Delivery
Expected at
3:00 p.m. EST
Wednesday
November 3, 1999
COMMERCIAL MARITIME INDUSTRY -
UPDATED INFORMATION ON FEDERAL
ASSESSMENTS
Statement of John H. Anderson, Jr., Director,
Transportation Issues,
Resources, Community, and Economic
Development Division
GAO/T-RCED-00-36
GAO/RCED-00-36T
(348202)
Abbreviations
=============================================================== ABBREV
============================================================ Chapter 0
Mr. Chairman and Members of the Subcommittee:
We are here today to summarize the information from our recently
issued report to you on federal assessments--user fees, taxes, and
other charges--levied on the commercial maritime industry.\1 Our
recent report updated information in a 1993 report on these
assessments.\2 The commercial maritime industry includes vessel
owners and operators, and shippers (importers and exporters) that
move commodities by vessels engaged in domestic and international
commerce. One of the assessments is the Harbor Maintenance Tax that
funds virtually all maintenance dredging of U.S. ports. Revenues
collected from this tax are placed in the Harbor Maintenance Trust
Fund.
Our statement today will provide information on (1) the federal
agencies that levied assessments in fiscal year 1998 compared with
fiscal 1991, the number of assessments levied, and the amounts they
collected; (2) who pays the assessments and in which funds they were
deposited in fiscal years 1991-1998; and (3) new federal assessments
that have been recently proposed. In addition, our testimony
provides information on the current status of the Harbor Maintenance
Trust Fund, and the projected annual balances of the fund.
In summary, we found that:
-- Eleven different federal agencies currently levy 124 different
assessments on the commercial maritime industry. These
assessments include fees such as customs duties, ship registry
fees, commercial fishing fees, and inspection charges. In
fiscal year 1998, these assessments totaled nearly $22 billion
compared to over $18 billion in fiscal year 1991. The Customs
Service collected by far the largest portion�almost $21 billion.
-- Shippers (importers and exporters) pay the largest portion of
the assessments, more than $20 billion of the total $22 billion.
Vessel owners and operators paid about $1 billion, and various
other parties paid the rest.\3 From fiscal year 1991 through
fiscal 1998, the amounts paid by shippers increased by 17
percent, while the amounts paid by owners and operators
increased by 46 percent. Most of the money collected is not
earmarked for specific purposes. About $20 billion of the total
revenues generated in fiscal year 1998 was deposited directly
into the General Fund of the U.S. Treasury. Another $995
million was used to reimburse agencies or private service
providers for the services they provided (issuing permits,
conducting inspections, physical services and other related
activities). The remaining $762 million was deposited into
three federal trust funds to be appropriated in future years to
agencies for designated services.
-- Two new federal assessments have been proposed. The
administration is proposing a Harbor Services User Fee as a
replacement for the existing Harbor Maintenance Tax. Unlike the
Harbor Maintenance Tax, which is paid by the shippers, foreign
trade zone users, or operators of the vessel, only vessel
operators would pay the proposed fee. Another proposal by the
National Oceanic and Atmospheric Administration would establish
a fee for granting permits for fishing in federally managed
fisheries.
-- At the end of fiscal year 1998, the Harbor Maintenance Trust
Fund had a balance of $1.3 billion. The balance is projected by
the U.S. Army Corps of Engineers to increase to $2.5 billion in
fiscal year 2004.
--------------------
\1 Commercial Maritime Industry: Updated Information on Federal
Assessments (GAO/RCED-99-260, Sept., 16, 1999)
\2 Maritime Industry: Federal Assessments Levied on Commercial
Vessels (GAO/RCED-93-65FS, Mar. 5, 1993). This report included
information on the assessments levied in fiscal years 1989 through
1991 and an estimate for 1992.
\3 Other parties includes individuals such as borrowers, brokers, and
individual passengers.
FEDERAL ASSESSMENTS ON THE
COMMERCIAL MARITIME INDUSTRY
TOTALED NEARLY $22 BILLION IN
FISCAL YEAR 1998
---------------------------------------------------------- Chapter 0:1
Eleven federal agencies currently levy 124 assessments, up slightly
from the 119 levied in fiscal 1992. While these overall numbers are
similar, the intervening years saw considerable change in the
specific assessments. More specifically, since fiscal year 1992, 50
new assessments were levied, 45 assessments were deleted, and 44 were
substantively changed. Although the specific assessments levied on
the commercial maritime industry are different from those levied in
1992, the distribution of who pays the assessments and what specific
funds receive the collections from the assessments remain�with some
exceptions�much the same as we reported in 1993.
The 11 federal agencies collected about $22 billion in assessments on
the commercial maritime industry in fiscal year 1998. The Customs
Service collected about $21 billion, or 96 percent, of this amount.
The 10 other agencies each collected an average of $90 million in
fiscal year 1998.\4 Overall, the collections for fiscal year 1998
were about $3.7 billion above fiscal 1991 levels, although
assessments were relatively constant for the 3-year period 1996-98.
Substantial changes in maritime assessment-related collections
occurred for some agencies. For example, collections by the Coast
Guard and the Animal, Plant, and Health Inspection Service rose
almost sevenfold and fivefold respectively from fiscal year 1991 to
fiscal 1998, while collections by the Internal Revenue Service and
the Federal Communications Commission fell by 61 and 63 percent,
respectively, during the same period. These changes occurred for
various reasons, such as the addition or deletion of assessments or
substantive changes made to the assessments levied.
--------------------
\4 The 10 agencies are the Animal, Plant, and Health Inspection
Service, Department of Agriculture; Centers for Disease Control and
Prevention, Department of Health and Human Services; Coast Guard,
Department of Transportation; Federal Communications Commission;
Federal Maritime Commission; Grain Inspection and Packers Stockyards
Administration, U.S. Department of Agriculture; Internal Revenue
Service, Department of the Treasury; Maritime Administration,
Department of Transportation; National Marine Fisheries Association,
National Oceanic and Atmospheric Administration, Department of
Commerce; and the Panama Canal Commission.
SHIPPERS PAY THE LARGEST
PORTION OF THE ASSESSMENTS AND
PROCEEDS GO TO THE GENERAL FUND
---------------------------------------------------------- Chapter 0:2
Although vessel owners and operators are the responsible parties for
most of the 124 specific assessments, the total payments they make
for these assessments are small relative to the total payments made
by shippers. Vessel owners or operators are exclusively responsible
for 85 of the 124 assessments. By contrast, shippers have exclusive
responsibility for only four assessments. The revenues collected,
however, from these four assessments totaled more than $20 billion of
the approximately $22 billion collected in fiscal year 1998. Customs
duties--which are not specific to the maritime industry but extend to
others who import and export goods�accounted for nearly all of the
$20 billion.
As shown in figure 1, the amount paid by shippers increased by about
$2.9 billion or 17 percent, from fiscal year 1991 to fiscal 1998.
Figure 1: Collections from
Shippers in Fiscal Years 1991
and 1998 (Dollars in millions)
(See figure in printed
edition.)
Note: This graph encompasses collections from shippers only. It
does not include collection amounts from the �shippers or other�
category which totaled $382,176,000 in 1991 and $648,951,000 in 1998.
As shown in figure 2, vessel owners and operators paid about $1
billion in assessments in fiscal year 1998, which was 46 percent or
about $309 million more than in fiscal 1991.
Figure 2: Collections from
Vessel Owners and Operators in
Fiscal Years 1991 and 1998
(Dollars in millions)
(See figure in printed
edition.)
Note: This graph encompasses collections from vessel owners or
operators only. It does not include collection amounts from the
�vessel owner or operator, shipper, or other� category which totaled
$666,000 in 1991 and $989,000 in 1998.
Payments made by "others,"\5 while a relatively small portion of the
total, increased from almost $1.3 million in fiscal year 1991 to
about $237 million in fiscal year 1998 as shown in figure 3.
Figure 3: Collections from
"Others" in Fiscal Years 1991
and 1998 (Dollars in millions)
(See figure in printed
edition.)
Most assessments--74 of the 124--and the vast majority of the amounts
collected--over $20 billion--are deposited in the U.S. Treasury's
General Fund and are appropriated for the general support of federal
activities. Another 46 assessments generate about $995 million to
reimburse agencies or private-service providers for expenses incurred
in providing a service. Services range from physical services, such
as tug service through the Panama Canal, to administrative services,
such as the Customs Service's processing of documents for vessels
desiring entry into the United States directly from a foreign port.
Three other assessments generate $762 million for three trust funds\6
, and one assessment generates revenues for a revolving fund.\7
Two New Federal Assessments Have Been Recently Proposed
Two federal assessments on the commercial maritime industry have been
recently proposed. The administration's proposal to replace the
Harbor Maintenance Tax with a Harbor Services User Fee has been
introduced as a congressional bill, H.R. 1947. The administration
characterizes the proposed Harbor Services User Fee as a �cost-based
user fee� that would be assessed on commercial vessel operators on
the basis of the type, capacity, movement, and operational
characteristics of the vessel. Collections would be deposited in a
Harbor Services Fund. According to the Presidents' fiscal year 2000
budget, the implementation of this new fee is estimated to raise, on
average, $980 million annually through fiscal 2004. The balance
currently in the Harbor Maintenance Trust Fund would be transferred
to the Harbor Services Fund.
The National Oceanic and Atmospheric Administration (NOAA) has
proposed the other assessment--the Central Registry for Limited
Access Permits Fee. This fee would pay for a permit to allow fishing
on federally managed fisheries. NOAA's general fund account for
expenses incurred in providing a service would receive any revenues
generated by the assessment.
Also, under another bill, H.R. 1260, the Harbor Maintenance Tax
would be repealed, and would be replaced by using funds from the
General Fund of the U.S. Treasury. Under still another bill, H.R.
111, the Harbor Maintenance Trust Fund would be retained, but taken
off budget.
--------------------
\5 Others in this instance include borrowers, brokers, and individual
passengers.
\6 The three assessments that generate revenue deposited in trust
funds are the Inland Waterways Fuel Tax, which funds inland waterway
projects of the U.S. Army Corps of Engineers; the Leaking
Underground Storage Tank Tax, used to carry out leaking underground
storage tank cleanup activities by the Environmental Protection
Agency; and the Harbor Maintenance Tax collected by the Customs
Service, which funds the U.S. Army Corps of Engineers and the St.
Lawrence Seaway Development Corporation's operation and maintenance
costs.
\7 The War Risk Revolving Fund is specifically used for enabling
vessels to continue to trade in a national emergency.
STATUS AND PROJECTED ANNUAL
BALANCES OF THE HARBOR
MAINTENANCE TRUST FUND
---------------------------------------------------------- Chapter 0:3
In March 1998, the Supreme Court ruled that the export-related
portion of the Harbor Maintenance Tax violated the constitution's
provision prohibiting taxes on exports. Subsequently, members of the
Congress expressed concern that funds supplied only from a tax on
imports would be insufficient for funding the maintenance and
operations of U.S. ports. However, if the import portion of the tax
remains intact, and if revenue projections from the U.S. Army Corps
of Engineers prove to be correct, the balance in the Harbor
Maintenance Trust Fund should be sufficient to sustain these
operations. Figures prepared by Corps staff place the fiscal year
1998 trust fund balance at $1.3 billion. And, from fiscal year 1999
through fiscal 2004, projected revenues from import fees are expected
to rise to about $920 million, while projected expenditures are
expected to rise to about $750 million. If these projections prove
correct, the resulting fund balance will be about $2.5 billion in
fiscal year 2004.
-------------------------------------------------------- Chapter 0:3.1
This concludes our prepared remarks, Mr. Chairman. We would be
pleased to respond to any questions that you or other Subcommittee
Members may have.
CONTACT AND ACKNOWLEDGEMENTS
---------------------------------------------------------- Chapter 0:4
For future contacts regarding this testimony, please call John H.
Anderson, Jr. at (202) 512-2834. Individuals making key
contributions to this testimony included Anne Cangi, Steven Gazda,
and Randall Williamson.
*** End of document. ***