OUTLOOK IS MIXED FOR HARBOR-TAX PLAN

OUTLOOK IS MIXED FOR HARBOR-TAX PLAN

Ports and shippers are upbeat but uncertain about the prospects for their new campaign to curb collections of the harbor maintenance tax.

Backers say the recent "cap-suspension" proposal sponsored by Rep. Jim McDermott, D-Wash., will offer some eventual relief from the tax on waterborne cargo that has been blamed for diverting U.S. cargoes to Canada.The McDermott plan would suspend collections of the tax for dredging whenever the balance in the Harbor Maintenance Trust Fund grows too large. The ''trigger" level would be set at the equivalent of one year's appropriations for maintenance dredging by the U.S. Army Corps of Engineers plus an obligated surplus of $100 million.

The plan, modeled after similar provisions in the Superfund and Oil Spill Liability Trust Fund, is given better odds than last year's failed bid to roll back the tax from the current 0.125 percent rate to the 1990 level of 0.04 percent.

The earlier rollback bill sponsored by Rep. Gerry Studds and Rep. Joe Moakley, Massachusetts Democrats, came to a dead-end because of budget rules requiring that any tax cut must be offset by revenue increases elsewhere.

Supporters were unable to come up with a viable tax hike to pay for the rollback and the initiative collapsed after Mr. Studds, as chairman of the House Merchant Marine and Fisheries Committee, said he would not refile the measure against the wishes of President Clinton.

Despite the setback, hopes for tax relief are on the rise again as result of the McDermott proposal following a favorable Joint Taxation Committee report, stating that the "cap-suspension" plan would have no revenue impact for five years. Under the budget rules, such a proposal needs no tax increase to balance it out.

But although prospects are improved, an aide to Rep. McDermott warned against raising hopes too high for the plan, which is backed by the American Association of Port Authorities.

The Treasury Department, the White House Office of Management and Budget, Customs and the corps have all voiced objections to the plan, which has yet to be filed as legislation.

"Everybody's got some sort of problem with it," said the aide, adding that a lot of thought is going into ways of meeting the administration's objections.

Even if the plan succeeds, supporters say the result may be both good and bad news.

The good news is that the "cap-suspension" plan will put some limit on collections. The bad news is that is may be a long time before the limit is reached. Because the proposal has no revenue impact for five years, it will offer no tax relief to ports and shippers for the same amount of time.

Still, most backers view the plan as a necessary compromise that will allow the rollback campaigners to salvage something from their efforts. The plan could also keep last year's trust fund surplus of $121 million from climbing out of sight and becoming a tempting target for new uses unrelated to harbor dredging.

Despite administration objections, supporters remain optimistic.

"There's a lot of friendly response to this idea," said Timothy Lovain, a lobbyist at Washington-based Denny Miller Associates and chairman of the Trade Taxes Group, an association of organizations that back the plan.

One key friend is AAPA, which did not throw its weight behind the rollback measure but is pushing for the McDermott bill.

Jean Godwin, AAPA vice president for government relations, said that the group's reluctance on the rollback resulted from its representation of all ports on both the U.S. and Canadian sides of the border.

While U.S. border ports like Boston and Seattle have complained that the tripled tax has driven their cargo to Canada where there is no similar assessment, other ports that are farther from the fray, like New York, have been lukewarm to a rollback and more concerned with keeping sufficient funds for dredging.

The cap idea is more in keeping with AAPA's longstanding position that harbor taxes should be used only for deep-draft navigation dredging and that no surpluses should accumulate in the trust fund, Ms. Godwin said.

Most of the administration arguments against the plan have focused on the issue of workability. Because the harbor maintenance trust fund reimburses the Treasury for corps' expenditures only at the end of each fiscal year, it may not be possible to duplicate the "cap-suspension" mechanism of the Superfund, which transfers collections periodically throughout the year.

Backers concede that such details need to be ironed out. But they reject the criticism that the expectation of a suspension in collections could cause some shippers to defer cargoes seasonally in order to avoid the tax.

Rod Schonland, manager of trade and regulations at Polaroid Corp. in Cambridge, Mass., and a member of the New England Shippers' Advisory Council, said any such effect on shipping would be minimal and would not differ from normal shipper practices with regard to quotas or tariff rates.

Ms. Godwin said prospects for the plan may depend on the introduction of a second tax bill in Congress this fall, which would serve as a vehicle for many members' proposals. Most observers doubt the proposal will be able to attract sufficient attention to proceed as stand-alone legislation.

Meanwhile, the trust fund surplus is expected to rise to $189 million at the end of this fiscal year, although much of that could be drawn down if the administration wins congressional approval to transfer $45 million a year for charting activities by the National Oceanic and Atmospheric Administration. Congress earmarked collections for NOAA in 1990 but never gave the necessary authorization for transfer.