THE DREDGING TAX LIVES

A fundamental contradiction underlies Washington's attitude toward trade, an incongruity that was evident in a half-dozen paragraphs deep within President Clinton's budget proposal. It badly needs to be corrected.

In his State of the Union address last month, the president called fervently for an expansion in world trade to generate important new opportunities for American farmers and manufacturers. But in the budget he proposed this week, the president shrugged off responsibility for a vital requirement of trade: the channels that allow ships to move cargo to and from America.They're facts of life: International commerce doesn't happen without ships, which carry 95 percent of America's trade by volume. Modern ships need channels that are deep enough to allow them to sail into American seaports. And dredging is usually needed to make that happen and keep it happening.

The Clinton administration doesn't deny this. It just doesn't want to pay for it. So it plans to tax commercial ship operators nearly $1 billion a year for the privilege of continuing to haul American products to global markets and international goods to American consumers.

To be fair, the basic concept isn't Mr. Clinton's. It dates back to President Reagan, who ended two centuries of federal financial responsibility for the nation's shipping channels and replaced it with what he called a user fee.

Problem is, no one has been able to decide who the user is. The Harbor Maintenance Tax put into effect under the Reagan administration was levied on the cargo. That was the best compromise that could be crafted out of a complex tangle of concerns and opinions. But the Supreme Court ruled last year the measure violated the Constitutional ban on taxing exports. The import portion is under fire from international-trade officials.

Now, the Clinton administration has decided that the user is not the importer or exporter, but the ship - specifically, the commercial cargo ship. So it has renamed the dredging tax and intends to levy it on commercial ship operators.

The administration also wants to shift even more of its responsibility. Under its proposal, proceeds of the dredging tax on ship operators would be used not only to clear silt off existing channels and maintain them at their authorized levels. The tax proceeds also would be used for the federal share of projects to deepen channels, getting that pesky issue out of the way.

The particulars of the latest version of the dredging tax won't be known for several weeks. The first version, a poorly thought-out plan slapped together without industry input last year with the intention of hustling it into law in the waning days of the 105th Congress, withered in the harsh light of industry opinion. The administration has said it will consult with ports, carriers and shippers this time around, but there's little evidence it's doing so.

What is certain from the president's budget proposal, however, is that the Clinton administration's commitment to a dredging tax is alive, well and expanding. Instead of acknowledging that virtually all Americans benefit from international trade, the administration has decided that the ship operators who carry most of it are the real users of the nation's trade gateways.

And, as it earmarked $34 billion for environmental programs, $18 billion for the Energy Department and an additional $12 billion for defense, the administration insisted in its budget that ship operators pay $1 billion a year for channels needed to move hundreds of millions of dollars of trade.

It's illogical and unfair. Worse, the dredging tax is counterproductive. It's not going to encourage work to make America's trade gateways safer or more efficient. It is going to make them more costly and less competitive.

The ocean-shipping sector and its customers obviously have a big task ahead of them in educating the administration about the trade and transportation facts of life. But they must not shrink from it. Too much is at stake.

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