Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Proposed Goods Movement Tax Increase

H.R. 2355 has been introduced with the goal of raising funding to support infrastructure projects. By its terms, the bill provides that states will be given yearly grants from the funds raised in proportion to their contribution to the fund. The funding will be administered by the state level Dept. of Transportation. The federal program will be administered by the Secretary of Transportation. Once funding is granted to a state, the formula for distribution is 90% for goods movement projects, 7% for environmental projects, and 3% for homeland security projects. At the same time, the project may be as much as 40 miles from the port of entry.

The eligibility criteria are need for federal funding, plus the project must promote definable goals related to improving highway, rail and port goods movement, mitigate environmental damage to air, water and soil caused by goods movement and promote the use of clean trucks or diesel replacement, plus improve cargo inspection, screening, and security training for workers. Regional and state transportation organizations are to be included in the project selection process. There is also a waiver provision allowing a project to be as much as 150 miles from a port of entry provided the site is located within the goods movement chain.

The proposal also mandates the federal share of the cost of a project "shall be" 90%. However, rather than mandate a priority for the selection of projects or the expenditure of federal funds, these factors are left to the states to decide, although grant authority to the Secretary of Transportation ends on October 1, 2019. 71.43% of the Harbor Maintenance Tax (HMT) collected will go into the newly authorized National Good Movement Improvement Fund. The provisions for the HMT are then amended to provide the tax applies to all cargo coming through any land or sea port of entry. The current rate is 0.125% and is substantially raised by this proposal. For ocean-going cargo, the HMT is increased to 0.4375% and is imposed at time of unloading, while it is set at 0.3215% for land shipments transiting through Canada and Mexico, and is imposed at time of entry. Goods originating in Canada or Mexico are exempt. At the same time, the Secretary may reduce the amount of the tax if the state or local government collects fees for goods movement improvement.

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