Does the Harbor Maintenance Tax (HMT) on U.S. imports encourage the diversion of cargo through Canada and Mexico?
That question – the subject of an ongoing Federal Maritime Commission (FMC) inquiry – may sound like an obscure exercise in policy analysis. But the inquiry has evolved into a debate over much broader issues, including whether government policies are putting U.S. seaports at a competitive disadvantage and are thereby restricting the country’s economic growth. Depending on how the government chooses to respond to the FMC’s findings, there could be several potential outcomes: Congress could change the way the HMT is assessed and its funds allocated, the United States could end up in a dispute with Canada and the World Trade Organization (WTO), and costs could rise for many importers and exporters.
Currently, U.S. importers pay a Harbor Maintenance Tax (HMT) of 0.125 percent on the declared value of imported merchandise. Established in the 1980s, the tax and its associated Harbor Maintenance Trust Fund are designed to help fund the U.S. Army Corps of Engineers’ harbor maintenance projects, including dredging. The fund has built up a multibillion-dollar surplus, which critics say is being used to help reduce the federal budget deficit instead of paying for needed waterways improvements. Read more here
