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Surcharge Opposed
Customs Tests Filing
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High court kills port tax
"Harbor Fee Ruled Unconstitutional Tax On Exports; Imports Still In
Question"
March 31, 1998: 2:09 p.m. ET
NEW YORK (CNNfn) - In a victory for U.S. exporters, the Supreme Court Tuesday
struck down a controversial charge on goods headed for sale overseas.
The fee, which is set at 0.125 percent of a cargo's value, is charged on all shipments
moving in and out of U.S. ports. Collected by the U.S. Customs Service, the money is
earmarked for use by the Army Corps of Engineers for maintaining U.S. waterways, harbors
and shipping channels.
U.S. businesses have complained about the fee since its imposition in 1986. Because it is
assessed based on the value of a product, higher value cargoes like electronics or
consumer goods tend to pay more than base products like wastepaper and building supplies.
However, the cost of maintaining waterways does not vary from product to product.
"Do computers need deeper shipping channels than ping pong balls? The whole thing
just doesn't make sense," said Kathy Luhn, director of government affairs for the
National Industrial Transportation League, one of the business groups critical of the tax.
Ironically, a few U.S. ports also complained about the fee, saying some businesses were
diverting cargo through Canadian ports, then moving cargo over the land border as a way of
circumventing the fee.
Exporters challenged the so-called Harbor Maintenance Fee, saying it violated the U.S.
Constitution, which bars taxes on exports. The U.S. government argued the charge was a
user fee, not a tax.
The Supreme Court, in a decision authored by Justice Ruth Bader Ginsburg, sided with the
exporters, saying the charge was in fact a tax.
"The Court's holding does not mean that exporters are exempt from any and all user
fees designed to defray the cost of harbor development and maintenance. It does mean,
however, that such a fee must fairly match the exporters' use of port services and
facilities," the court stated.
The ruling in the case, U.S. vs. United States Shoe Corp., will open the door for
settlements in roughly 4,000 cases pending before the Court of International Trade
(NITL),
which made the original ruling in favor of the exporters. That ruling was appealed by the
government. Money collected from the fee is put in the Harbor Maintenance Trust fund,
which currently has a surplus of more than $1 billion.
"The big question now is refunds," said Peter Gatti, director of policy at
NITL.
The ruling only covers export cargoes, however. A challenge is underway before the
European Commission on the legality of the fee on cargoes imported into the United States.
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HMF