The Supreme Court this week eliminated approximately $250 million a year from the federal budget by striking down an export tax that the government had argued was a user fee.
In United States v. United States Shoe Corporation, the high court ruled that exports should not be subject to the Harbor Maintenance Tax, which is collected by the Customs Service and used to fund U.S. Army Corps of Engineers dredging projects and the operations of the St. Lawrence Seaway.
The government argued that the Harbor Maintenance Tax was a user fee, designed to pay for government services provided to U.S. port users. The Supreme Court, however, ruled that it was in fact a tax that violated the export clause of the Constitution, which states that "no tax or duty shall be laid on articles exported from any state." U.S. Shoe Corporation had sued to get a refund on the money it has paid into the Harbor Maintenance Trust Fund.
About 4,000 additional claims against the export tax are pending in the Court of International Trade, which will rule on refunds.
The Supreme Court's ruling does not affect the import portion of the Harbor Maintenance Tax, which brings in about $400 million a year. But the European Community has begun proceedings in the World Trade Organization to challenge the import tax.
A Corps of Engineers spokesman said the ruling will not hurt dredging operations in U.S. harbors in the near future. The Harbor Maintenance Trust Fund has built up an annual surplus of about $600 million since it was established in 1986.
"We have sufficient funds this year and in the president's budget next year to operate and maintain harbors," the Corps spokesman said. "There is no danger of harbors being closed or work stopping in response to this ruling any time in the near future."
St. Lawrence Seaway Development Corp. acting administrator David Sanders said the court ruling would have little effect on his agency's $12 million annual budget, and said it would be premature to speculate what would happen if the European challenge to the import tax is successful.
The Clinton Administration is urging agencies to adopt user fees wherever possible to fund new initiatives, but the groups who would have to pay the fees often oppose them. Agencies have proposed $22.9 billion in new fees that would take effect between 1999 and 2003, including fees on meat, poultry and egg processors to fund USDA inspections. Food processors have begun lobbying Congress against that proposal.
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