70% of cargo passing through the Port of Tacoma is bound for destinations outside of Washington state. This cargo is discretionary in nature—it does not have to pass through Washington state to get to its destination. Shippers could easily divert the cargo to ports in Canada, California, or the Gulf Coast if costs become too high
The Legislature’s Joint Transportation Committee, in a 2007 study, found that a tax as low as $30/TEU (twenty-foot equivalent unit container), or 1.5 percent per cost of moving a container, could divert as much as 30% of Washington cargo out of state. According to one report author, “Puget Sound container ports have significant competition and imposition of a fee could lead to a significant loss of container traffic…Decision makers should proceed with care.”
When the federal Harbor Maintenance Tax on cargo entering U.S. ports went into effect in 1997, cargo shifted to Canada. According to a 2012 Federal Maritime Commission study, approximately half of U.S.-bound cargo passes through Canadian ports primarily because of the cost impacts associated with the HMT. The Federal Maritime Commission went on to note that ports located outside of Washington state often market the tax benefits associated with diverting cargo away from ports in the Pacific Northwest.
The loss of discretionary cargo would mean a loss of family-wage jobs– not just longshore, but also railroad workers, truck drivers, distribution center employees, tug operators and more. For example, a 30% loss in cargo would result in an estimated loss of 9,416 jobs in Washington and $58.4 million in state and local tax revenue per year.
Increasing taxes on the movement of cargo threatens exports ,Washington exporters rely on imports to provide a cheap supply of empty containers to carry their goods during the “backhaul” to foreign markets. Increasing taxes on the movement of cargo has the potential of diverting discretionary import cargo away from the state, depriving Washington exporters access to those empty containers.
Taxes on the movement of cargo
70% of cargo passing through the Port of Tacoma is bound for destinations outside of Washington state. This cargo is discretionary in nature—it does not have to pass through Washington state to get to its destination. Shippers could easily divert the cargo to ports in Canada, California, or the Gulf Coast if costs become too high
The Legislature’s Joint Transportation Committee, in a 2007 study, found that a tax as low as $30/TEU (twenty-foot equivalent unit container), or 1.5 percent per cost of moving a container, could divert as much as 30% of Washington cargo out of state. According to one report author, “Puget Sound container ports have significant competition and imposition of a fee could lead to a significant loss of container traffic…Decision makers should proceed with care.”
When the federal Harbor Maintenance Tax on cargo entering U.S. ports went into effect in 1997, cargo shifted to Canada. According to a 2012 Federal Maritime Commission study, approximately half of U.S.-bound cargo passes through Canadian ports primarily because of the cost impacts associated with the HMT. The Federal Maritime Commission went on to note that ports located outside of Washington state often market the tax benefits associated with diverting cargo away from ports in the Pacific Northwest.
The loss of discretionary cargo would mean a loss of family-wage jobs– not just longshore, but also railroad workers, truck drivers, distribution center employees, tug operators and more. For example, a 30% loss in cargo would result in an estimated loss of 9,416 jobs in Washington and $58.4 million in state and local tax revenue per year.
Increasing taxes on the movement of cargo threatens exports ,Washington exporters rely on imports to provide a cheap supply of empty containers to carry their goods during the “backhaul” to foreign markets. Increasing taxes on the movement of cargo has the potential of diverting discretionary import cargo away from the state, depriving Washington exporters access to those empty containers.