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LaTourette Bill Could End Tax On Great Lakes Shipping

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U.S. Reps. Steven C. LaTourette (R-OH), Pat Tiberi (R-OH) and Brian Higgins (D-NY) today introduced legislation that will exempt the Great Lakes from the onerous Harbor Maintenance Tax (HMT) that is thwarting efforts to establish a ferry that would move cargo across Lake Erie to Canada from a NE Ohio port.

"The Harbor Maintenance Tax is the main obstacle to establishing a cargo ferry to transport goods to and from NE Ohio and Canada," LaTourette said, adding that Canadian ports have no incentive to finalize ferry service across Lake Erie if the costly HMT remains in place. He said cargo ferry proposals are in limbo in Ashtabula, Cleveland, Grand River and Conneaut.

"This could be the last hurdle to making cargo Ferry service a reality," LaTourette said. "This will hopefully open up an avalanche of new investment along the Great Lakes in our region."

The Short Sea Shipping Act will carve out a narrow exemption for the Great Lakes/St. Lawrence Seaway System. It would get trucks off the roads, reduce pollution, save shipping time and be a boon to the Great Lakes shipping industry, the trucking industry and the local economy, LaTourette said.

The HMT, established in 1986, is a tax on the value of cargo. It is levied to pay for harbor maintenance, like dredging of ports and navigational channels. More than $1 billion was collected last year at a rate of 0.125%, or $1.25 per $1,000 in cargo value. The tax is not paid by the vessel owner or a port, but rather the owner of the cargo in each ship. Today, the HMT is assessed on cargo transported between U.S. ports, and cargo imported to U.S. ports from other countries, but not on exports. Port dredging would continue even with a Great Lakes exemption.

Not only does the AMT pose a massive hurdle on the establishment of a Great Lakes/Canada ferry system, it discourages shipping between ports in the Great Lakes, LaTourette said.

He said a trip across Lake Erie to one of Canada's ports by lake carrier is about 80 miles and takes about three hours. By comparison, it might take six hours for a truck loaded with auto parts to reach the same destination by driving around Lake Erie. He believes there would be a huge demand for ferries loaded with trucks and cargo traveling back and forth between Ohio and Canada.

"This is just another example of the government getting in the way of allowing the economy to grow," LaTourette said. "Once the HMT is gone we will be able to take advantage of Ohio being one of the best locations in the nations."

LaTourette said waterborne transportation on the Great Lakes is safe, highly fuel efficient, and reduces emissions. He said the Lake Carriers' Association in Cleveland has said it would take take 2,800 25-ton trucks, 700 railroad cars or 47 barges to carry the load of one Great Lakes vessel.

In addition, one study by the U.S. Army Corps of Engineers found that Great Lakes shipping saves about $3.6 billion a year over the next least-costly methods of transportation -- by rail or truck.

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