THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, October 28, 1995 TAG: 9510280321
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 64 lines
In a ruling that could boost business in the port of Hampton Roads, a federal court threw out a U.S. export tax imposed at the nation's harbors since 1987.
``If this stands, it's going to make us more competitive against places like Canada,'' said Joseph A. Dorto, chief executive and general manager of Virginia International Terminals Inc. VIT operates the state-owned terminals in Norfolk, Portsmouth and Newport News.
A three-judge panel of the U.S. Court on International Trade in New York ruled Wednesday that the tax was unconstitutional based on the Export Clause of the Constitution, which bans taxes ``on articles exported from any state.''
The Justice Department is expected to appeal the ruling.
The tax, known as the harbor maintenance fee, was based on the value of imports and exports shipped through the nation's ports. The import assessment is being challenged separately.
Money raised by the tax went into a fund to pay for harbor maintenance projects such as dredging. However, none of the money has been used yet.
``They do this all over the world, charging fees for deepening,'' said James S. Provo, president of the National Association of Maritime Organizations. ``Of course they don't have our Constitution. . . We'll have to see what happens on appeal.''
NAMO has been lobbying to get money in the fund released to pay for projects such as dredging now required on the James River, said Provo, also a senior vice president at the Norfolk ship's agency T. Parker Host Inc.
If the repeal stands, the government may have to refund up to $2.5 billion for taxes collected since 1987. The federal trade court will decide in three weeks how much the government has to refund, said Steven H. Becker, a lawyer represented about 60 of the 600 companies involved in the suit.
Becker also said the decision could give American exporters a better shot at business abroad. ``Many companies argued that this tax made them less competitive on world markets,'' he said.
To avoid the tax, some exporters, particularly in the Midwest, had been moving goods to Canadian ports for shipment, Dorto said. Hampton Roads has long been a big port for Midwest shipments because of its good rail connections.
With the tax overturned, some of those exports could come back through Hampton Roads, Dorto said.
The tax amounted to a charge of 1/8 percent on shipment values. The federal government unsuccessfully argued that the assessment was a maintenance fee rather than a tax because the rates were applied by value, not by weight or volume.
``Of course the problem still exists as to how we're going to pay for dredging,'' Dorto said.
As the federal budget gets tight, funding for dredging is getting scarcer. However, it's not as much a problem in Hampton Roads as it is in other ports.
``As long as we've got the military here and coal here, they're going to have to maintain the channel,'' Dorto said. MEMO: The Associated Press contributed to this report.The Associated Press
contributed to this report. by CNB