Friday, October 17, 2008

Container Tax Debate Heats Up

There have been some significant developments in the container tax debate in Washington State this week. As some may recall, the legislature considered a bill to impose a $50 per twenty-foot equivalent unit tax in 2007 (most containers passing through Washington's ports are 2 TEUs in length). That bill was amended to create a study of potential diversionary impacts of a container tax, as well as other potential alternatives for funding freight infrastructure. The Legislature retained Cambridge Systematics to conduct the study.

Earlier this year, Cambridge's subcontractor, Dr. Robert Leachman, validated industry's arguments that significant diversion would result if a tax were adopted—a 30 percent drop in volumes with a $30/TEU tax. What would this mean for Washington state? A loss of 9,415 jobs and $58.5 million in lost wages.

This week Cambridge concluded that even on major freight corridors, such as a completed SR-167, passenger vehicles, and not freight, received the majority of the benefits from each of these projects. They also found that heavy trucks, a subset of which carry containers, received the least amount of benefit.

Responding to this information, key legislators on the state transportation committees have said it is difficult to provide the linkage necessary to justify a container tax, especially given the potential diversionary impacts.

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