Ocean cargo: Shippers brace for new “sin” tax

Patrick Burnson, Executive Editor -- Logistics Management, 3/3/2008

SAN FRANCISCO—As if California’s economically strapped shippers did not have enough to worry about, one of the state’s most vehement environmental activists is adding one more. Sen. Alan Lowenthal, D-Long Beach, is prepared to wallop importers with a container fee framed as a “sin tax.” This comes on the heels of taxes levied just months ago by the Ports of Los Angeles and Long Beach. The current version of Lowenthal’s bill would bring the total taxes to $130 per twenty-foot equivalent unit (TEU).

Resistance by shipper groups like the West Coast Waterfront Coalition helped persuade California Governor, Arnold Schwarzenegger, to veto the past two attempts to pass such legislation last year.

“The Governor was right on the policy and right on the law in vetoing SB 927,” said Robin Lanier, executive director of the Waterfront Coalition. “State taxation of international commerce just isn't constitutional, and would have set a very bad precedent. This legislation would have imposed an arbitrary tax program across California’s goods movement industry that is contrary to federal law and U.S. obligations under international law.”

But political analysts suggest that Schwarzenegger may be pressured into signing the legislation to appease environmental factions this time around. The bill’s advocates continue to maintain that the tax will mitigate air quality concerns and fund “green” infrastructure.

Shipper groups are likely to argue that California should continue to support efforts to create a national goods movement policy. This, they have argued, would unite state stakeholders including cargo owners, importers, exporters, citizens and others to develop policy priorities across the goods movement industry that would include public-private partnerships.

The bill would affect three of the nation’s largest container ports –Los Angeles, Long Beach, and Oakland –. Opponents of the legislation speculate that shippers may seek all-water alternatives to West Coast calls if slapped with additional expense.