LETTERS TO THE EDITOR

LETTERS TO THE EDITOR

Time to challenge the domestic HMT

On March 31, 1998, the Supreme Court declared that the Harbor Maintenance Tax on U.S. exports was unconstitutional. The basis of this ruling was Article 1, Section 9 of the U.S. Constitution, which states: "No tax or duty shall be laid on articles exported from any state."

No mention was made regarding the legality of the domestic HMT, yet the sentence immediately following the one quoted above reads: "No preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another; nor shall vessels bound to, or from, one state, be obliged to enter, clear, or pay duties in another."

The intent of the Constitution appears clear: Neither should taxes be levied on the movement of goods between states.

The domestic Harbor Maintenance Tax acts as a disincentive to the establishment of coastwise short-sea shipping for domestic cargo. This tax on ocean shipments of freight between states is paid not by the carrier, but by the shipper who frequently violates the law by simply failing to send his quarterly HMT taxes to Customs and Border Protection in Chicago. However, tax evasion, whether through ignorance of the law or for any other reason, is neither sound legal strategy nor prudent corporate policy for a company that is contemplating entry into a domestic short-sea shipping service.

If the Department of Transportation is serious about promoting short-sea shipping as an affordable alternative to relieve the congestion that clogs our coastal highways, the Secretary of Transportation should appeal to the White House to overrule the Office of Management and Budget and allow elimination of the domestic HMT in order to encourage the growth of short-sea shipping.

Robert W. Kesteloot

Partner

Management & Transportation Associates Inc.

Reston, Va.