WASHINGTON—Canada’s shipping industry appears to have dodged a threatened U.S. cargo tax.
The push for a tax on cargo from Canada and Mexico was excluded from the new Water Resources Reform and Development Act, signed into law June 10.
“(This) would have been a massive tax grab and a massive congestion problem,” ambassador Gary Doer said in an interview before the bill was signed.
“This would have been a real blow to Canadian ports, and real congestion points at our borders.”
The final legislation doesn’t include the proposed 0.125 per cent tax, which would have been collected by U.S. Customs on all cargo carried into the U.S. via Canadian ports.
Some Washington state lawmakers say their ports are currently disadvantaged by the American tax system.
They say it’s unfair that certain ports have been forced to put disproportionately high sums into a national harbour maintenance fund, making them less competitive against Canadian ones.
The new law offers $25 million to certain ports, like those in Seattle and Tacoma, that are net contributors to the fund. Other provisions include authorizing 34 new Army Corps of Engineers projects.
The Canadian government had feared that the sweeping, 10-year funding plan would incorporate the tax. Washington state Democrats in the Senate and House of Representatives had proposed such a levy in similar bills.
In a recent U.S. speech, Transport Minister Lisa Raitt even hinted at the possibility of trade retaliation.
The Canadian side argued that its ports are gobbling up business from Asia because of faster maritime routes and fast-expanding infrastructure.
Wendy Zatylny, president of the Association of Canadian Port Authorities, said the tax would have been an unfair penalty—not just on Canada’s ports, but on the entire continental economy.
“Canada’s port authorities invest heavily in infrastructure and innovation, and their efforts have allowed them to remain at the forefront of a highly-competitive and mobile sector,” Zatylny said in an email.
She said 10 million jobs on the continent depend on trade and investment between the two countries and they benefit from ongoing efforts to speed up the flow of goods.
The proposed cargo tax, she said, would have pushed things in the wrong direction and “would have been detrimental to these positive efforts.”
The idea of a tax isn’t completely dead, but without the help of a larger piece of legislation, it’s likely to falter, as it has in the past, Doer said.