Possible Other Proposal The ad valorem customs user fee could be frozen at 0.22 percent for fiscal year 1988 and subsequent years. Pros and Cons for Other Proposal Argument for the proposal Actual receipts for fiscal year 1987 at 0.22 percent are roughly equivalent to the cost of Customs' commercial operations, whereas the scheduled reduction in the fee level to 0.17 percent will not be sufficient to offset the rising commercial costs of the Customs Service. Argument against the proposal Importers have assumed that the fee would be reduced in fiscal year 1988 and may be adversely affected by freezing the fee at a higher level. 4. Coast Guard Present Law The Coast Guard provides various services to recreational and commercial boaters, including inspections, licenses, navigation aids, and search and rescue operations. These services are funded from general revenues. President's Budget Proposal The President's budget proposes a phased implementation of user fees for certain Coast Guard services. According to the proposal, fees for direct, transactional services (e.g., issuing licenses) would be set so as to recover the actual cost of providing the service. Additional fees would be set in proportion to the Coast Guard's cost of providing the service to each class of users (e.g., recreational, commercial fishing, and deep-sea and inland commercial users). No fees would be charged for core governmental functions carried out by the Coast Guard (e.g., defense, law enforcement, and polar ice operations). The user fee schedule that has been proposed for the Coast Guard includes an annual fee schedule for various vessels and other fees relating to licensing, inspections and documentation. The proposed fee schedule would provide that the receipts from the user fees are to be deposited in the general fund o. the Treasury as proprietary receipts of the department in which the Coast Guard is operating, and would ascribe those receipts to Coast Guard activities. Vessel fees.-A summary of the annual vessel fee schedule follows. Port and environmental safety fee schedule.-Proposed fees range from $36 for a hot work permit to $550 for reception facility inspections. Documentation of vessels.-Proposed fees range from $170 for initial certificate of documentation to $50 for certificate renewal. Vessel inspection.-Proposed fees include (1) Initial inspection-from $1,000 plus $50 per gross ton for a small passenger vessel to $25,500 for a large passenger vessel. (2) Inspection for certification-from $225 for an unmanned fixed platform to $4,080 for a nautical school ship. (3) Reinspection-from $225 for fixed platforms to $2,040 for a liquid natural gas carrier, tank vessel, and bulk carrier of 75,000 tons or over. (4) Drydock examinations-from $250 for a small passenger vessel to $3,825 for a tank vessel and bulk carrier of 75,000 gross tons or over. Merchant vessel personnel.-Proposed fees range from $200 for issuing a license to $75 for a license renewal. Effective date.-This proposal would be effective October 1, 1987. Pros and Cons Arguments for the proposal 1. The proposed fees would defray the expenses incurred by the Coast Guard in providing clearly identifiable services directly to beneficiaries. 2. The fees would be designed to recover the costs of providing services to recreational boaters, commercial fishing, and deep-sea and inland commercial operators. User fees would not be used to recover the costs of activities that provide benefits to the general public, such as, defense preparedness, law enforcement, and polar icebreaking operations. 3. By substituting user fees for general fund financing of these Coast Guard activities, inefficient transportation subsidies would be eliminated, and the general taxpayer would not subsidize some other individual's recreational or business activities. Arguments against the proposal 1. It is not always possible to identify all the private beneficiaries of governmental services, and thus the government may erect competitive obstacles that affect some but not all competitors. 2. There may be substantial disagreement about whether a service or activity of the Coast Guard should be considered within a fee-for-service context; for example, navigational aids are used by the armed services as well, and once installed for their use, there is little or no additional cost to the Coast Guard in allowing commercial fishermen and shippers and recreational boaters to use the same navigational aids. 3. Some of the proposed user fees may not be within the jurisdiction of the Committee on Ways and Means. II. OTHER POSSIBLE REVENUE OPTIONS A. Excise Taxes 1. Alcoholic Beverage Excise Taxes Present Law Under present law, excise taxes are levied on the production or importation of the three major types of alcoholic beverages: distilled spirits, wine, and beer. Also, occupational taxes are imposed on certain persons involved with the production or marketing of alcoholic beverages. The excise tax on distilled spirits was increased by $2.00 per proof gallon in 1984 (the only increase since 1951). The excise taxes on wine and beer were last increased in 1955. The following is a summary of the excise taxes currently imposed on alcoholic beverages: 2 Wines containing more than 24 percent alcohol are taxed as distilled spirits. For example, the Federal excise tax on a one-fifth gallon bottle of 80-proof liquor is $1.05; on a six-pack of beer, approximately $0.16; and on a 750-milliliter bottle of still wine (less than 14 percent alcohol), about $0.03. Possible Proposals 1. The alcoholic beverage excise tax rates could be doubled. 2. The tax rates in possible proposal 1 could be indexed for inflation, using the CPI. 3. The excise tax rates on wine and beer could be based on alcohol content (like the present distilled spirits tax), and at the present-law distilled spirits tax rate. 4. The distilled spirits tax rate could be doubled, with wine and beer tax rates also being based on alcohol content and being imposed at the increased distilled spirits tax rate. |