A statistical approach to US harbor maintenance tax rates and replacement user fees

Abstract

The US Harbor Maintenance Tax (HMT) is not fulfilling its intended goal. It has led to a payment imbalance between port user groups (exporters do not pay thereby leading to consultations regarding General Agreement on Tariffs and Trade (GATT) violations) and large surpluses, which have created a burgeoning trust fund balance. Statistical analysis does not support the current HMT rate; investigation reveals the HMT rate could be reduced to 0.09 per cent from 0.125 per cent. Further, as there is no evidence that value is highly correlated with costs (regardless of functional form) a possible method for designing a national user fee structure to replace the HMT is presented. This structure would be compliant with the US Supreme Court requisites for a user fee; it includes variables such as tonnage, port stay and draft, which are found to be correlated with costs using regression analysis. In addition, a method to statistically derive appropriate fee weights (rather than arbitrarily assigning) for each of these variables is outlined and illustrated by a numerical example. Currently, missing data represent a severe restriction to the design and appropriate implementation of user fees in the United States; these data could be collected but not without new procedures and incurring additional costs.