California Container Tax Defeated

The National Industrial Transportation League (NITL) reported that when the container tax bill passed a vote in the California Assembly Appropriations Committee, it received instant opposition from Los Angeles Mayor Antionio Villaraigosa. Governor Arnold Schwarzenegger then threatened a veto, effectively killing this version of the bill.

At the heart of the bill (SB 974) was a $60-per-container (forty-foot-equivalent unit) tax on all inbound and outbound containers moving through the ports of Los Angeles, Long Beach, and Oakland. The funds would be spent on congestion relief and environmental mitigation.

The California Chamber of Commerce (CalChamber) opposed the bill saying it would put California’s largest ports at a disadvantage. No other port facilities in the state or the nation are subject to this tax, says CalChamber. The Chamber labeled the bill a job killer. It said, in part, that while the actual economic impact of the bill was unknown, it points to nearly 319,000 jobs supported by the Port of Long Beach and $16.3 billion in wages. The port of Los Angeles creates 259,100 jobs regionally, CalChamber continued, which translates into $8.6 billion in regional wages and salaries.

Backing up its economic argument is a question over the constitutionality of the tax. It could violate the US Constitution Commerce Clause, said CalChamber, and breaches current obligations under various international trade agreements “such as Article VII of the General Agreement on Trade and Tariffs (GATT).”

Other solutions exist, said CalChamber. It cited revenue bonds—California ports are carrying nearly $3.5 billion in revenue bonds for maritime infrastructure improvements, it said. Public-private partnerships also offer a viable way to fund goods movement-related projects outside the ports, it continues.

The issue has been around since 2005 when Lowenthal introduced a similar bill that he later agreed to hold for a year to strike a compromise. The current bill was introduced to committee in February 2007 and had passed through readings, hearings, and amendments.

Previous coverage:

California Bill Would Tax Containers

$60 Container Tax Added At California Ports

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