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compliance with "pay-as-you-go" budget scoring rules. The
committee would strongly encourage that revenues from the
provisions described above be used to fund only the maritime
security program.



III. Possible Option
Revenues

Adopt a three-part proposal designed to increase revenues by
approximately $1.0 billion over the ten-year period, October 1,
1994 through September 30, 2004.

(1) Increase ship passenger departure tax

The current $3 per passenger excise tax on certain ship
departures would be increased to $5 per passenger for
transportation for which total charges of $150 or more were made.
This increase would be effective on January 1, 1995.

(2) Impose tax on international shipping fuels

A 1-cent-per-gallon excise tax would be imposed on diesel
fuel and residual fuel oil sold for use in commercial vessels
departing the United States for foreign ports. The tax would not
apply to fuel sold for use in ships when operating exclusively
within the Great Lakes. (Similarly, fuel used in fishing vessels
that leave the United States, fish in international waters, and
return to the United States with their catches would not be
subject to the tax.) The tax would be collected at the retail
level, and in the case of diesel fuel, would not affect the
diesel dyeing provisions adopted in 1993 (i.e., these ships would
continue to use dyed diesel fuel). The tax would be effective on
January 1, 1995.

(3) Increase tonnage fees

Current tonnage fee rates would be changed to 22 cents per
net registered ton for all vessels, regardless of the location of
their last port of call. The annual per-visit cap on which fees
are imposed would be increased from 5 to 12. The new rates would
be effective from October 1, 1994 through September 30, 2004.

As provided in H.R. 4003, revenues from the increased
tonnage fees would be retained in the General Fund and credited
to the Coast Guard account as offsetting receipts.

Related provisions

The contract authority provided in H.R. 4003 would be
limited to the approximately $1 billion raised by this three-part
funding proposal, and provisions would be included to ensure



#94-1 066

VERY PRELIMINARY
26-Jul-94
- Ways and Means Committee -
POSSIBLE AMENDMENTS TO H.R. 4003
Fiscal Years 1995-2004
[Millions of Dollars]
Provision Effective 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-04
|. Increase the ship passenger tax from
$3.00 to $5.00 for voyages over
$150.00. 1/1/95 6 9 9 10 10 "1 12 12 13 13 105
il. Impose a $0.01 per galton retail
excise tax on diesel and residual fuel
oll used In commercial ships leaving
U.S. ports for foreign ports..... 1/1/95 26 37 37 38 38 39 39 39 40 40 374
Il. Tonnage fees at uniform rate of
$0.22 per ton; 12 visit per year cap
10/1/94 24 24 24 24 73 73 73 73 73 73 532

NET TOTALS..... 56 70 70 72 121 123 124 124 126 126 1,014

Joint Committee on Taxation

jetalls may not add to totals due to rounding.

(1] Estimates provided by the Congressional Budget Office (CBO).


Joint Committee on Taxation
July 26, 1994
JCX-10-94

H.R. 4003--THE MARITIME ADMINISTRATION
AND PROMOTIONAL REFORM ACT OF"1994 —

Scheduled for Mark-up by the
Committee on Ways and Means
on July 27, 1994

I. Legislative Background

H.R. 4003, the Maritime Administration and Promotional
Reform Act of 1994, has been sequentially referred to the
Committee on Ways and Means ("Ways and Means") through July 28,
1994. The bill was previously reported by the Committee on
Merchant Marine and Fisheries ("Merchant Marine") on June 13,
1994 (H. Rept. 103-544, Part 1). The bill was referred to Ways
and Means because it includes an increase in the rate of current
tonnage fees imposed on certain commercial vessels entering
United States ports from foreign ports. Increasing these tonnage
fees constitutes a revenue measure within the jurisdiction of
Ways and Means.

Under the bill as reported by Merchant Marine, revenues
derived from the increased tonnage fees would be credited as
offsetting receipts to the Coast Guard account in the General
Fund. Under the "pay-as-you-go" scoring rules of the Budget
Enforcement Act of 1990, these increased revenues would permit
the creation of two new direct spending programs: a Maritime
Security and Competitiveness program and a Series Transition
Payment program.

II. Present Law, Administration Proposal,
and H.R. 4003, as Reported by Merchant Marine

Present Law

Tonnage fees on ships entering U.S. ports have been imposed
by the United States since 1790. Subject to limited exceptions,
these fees currently are imposed on all commercial vessels
entering the United States from foreign ports. The rates of
these fees vary depending on whether a vessel’s last port of call
was in the Western Hemisphere or was located in another region of
the world. Vessels from Western Hemisphere ports are assessed a
fee of nine cents per net registered ton and other vessels are
assessed a fee of 27 cents per ton. Only the first five arrivals
per vessel per year are subject to the fees.



-2-

The tonnage fee rates were increased to their current levels
in 1990, effective on January 1, 1991. These increases currently
are scheduled to expire after September 30, 1998, at which time
the rates are scheduled to revert to their pre-1991 levels of two
cents per ton for Western Hemisphere arrivals and six cents per
ton for arrivals from other ports.

Administration Proposal
Tonnage fees

In March 1994, the Administration proposed increasing
tonnage fee rates for the period through September 30, 2004. The
Administration-proposed rates would be 24 cents per ton for
arrivals from Western Hemisphere ports and 71 cents per ton for
arrivals from other foreign ports through September 30, 1998; and
17 cents per ton for arrivals from Western Hemisphere ports and
50 cents per ton for arrivals from other foreign ports from
October 1, 1998 through September 30, 2004. {The drop in the
rates after September 30, 1998, is attributable to the scheduled
expiration of the increase that was enacted in 1990.) The
Administration proposal would retain the current limit of five
visits per year on which the fees are imposed.

The Administration estimated that its proposal would raise
approximately $1 billion during the period October 1, 1994
through September 30, 2004. These revenues would be retained in
the General Fund, but credited as offsetting receipts to the
Coast Guard account.

Related provisions

The Administration proposal would use the revenues raised
from the tonnage fee increase under the "pay-as-you-go" scoring
rules of the Budget Act to permit new direct spending for a
Maritime Security Program. Under this program, owners of up to
52 vessels would enter into contracts with the United States for
annual payments in exchange for allowing the United States to use
their vessels and crews for transportation in times of national
or humanitarian emergencies. (These annual payments would be in
addition to actual compensation for use of the vessels and
crews.)

E.R. 4003, as Reported by Merchant Marine

Tonnage fees

H.R. 4003 (Title II), as reported by Merchant Marine, would
make three principal modifications to the current tonnage fees:



(1) Fee rates would be increased to 53 cents per net
registered ton, without regard to the last port of call of the
vessel;

(2) The limit of five visits per year on which fees are
imposed would be increased to 12 visits per year (for a maximum
of $6.36 per ton during any year); and

(3) The date on which the fee increase that was enacted in
1990 would expire would be delayed until October 1, 2004; thus,
the rates would remain at 53 cents from October 1, 1994 through
September 30, 2004.

The increased fees would be effective on October 1, 1994.
As under the Administration proposal, revenues from the increased
amount of tonnage fees would be deposited in the General Fund of
the Treasury as offsetting receipts to the Coast Guard account.
The Congressional Budget Office has estimated that revenues from
the increased fees would total $1.74 billion for fiscal years
1995 through 2004.

Rel isi

Title III of H.R. 4003, as reported by Merchant Marine,
would provide contract authority (new direct spending) of up to
$1.7 billion over the period October 1, 1994-September 30, 2004,
for a Maritime Security Program and a Series Transition Payment
program to be created by another bill--H.R. 2151, the "Maritime
Security and Competitiveness Act of 1993". (H.R. 2151 passed the
House on November 4, 1993; Merchant Marine intends to join the
provisions of H.R. 2151 with H.R. 4003 when H.R. 4003 is
considered by the House.) Under the Series Transition Payment
program, U.S. shipyards would compete to receive funding for
transition from military to commercial shipbuilding.

H.R. 4003, as reported by Merchant Marine, also would
require expenditure of certain previously appropriated (but not
yet obligated as of October 1, 1994) amounts for acquisition of
vessels for the Ready Reserve Force. In addition, Title I of
H.R. 4003, as reported by Merchant Marine, would authorize
appropriations for the programs of the Maritime Administration
(in the Department of Transportation) for fiscal year 1995, and
would make certain other changes to Merchant Marine statutes
(including reemployment rights for certain merchant mariners and
a program of financial assistance to qualified ship repair yards
for their modernization) .