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modified to bring it in line with similar social security benefits. Later, Tier 2 retirement annuities were made taxable in the same manner as private pensions.
The deficit reduction potential of this increased tax is miniscule while the effect on the budgets of elderly and disabled retired workers can be severe. We ask that the Committee reject this proposal.
MISCELLANEOUS USER FEES
Coast Guard fees
The House Budget calls for the recovery of $50 million per year over the next three years from the imposition of Coast Guard user fees. The Senate resolution calls for three times that much. The services provided by the Coast Guard protect life and property at sea and thus facilitate U.S. commerce. The AFL-CIO believes that such a benefit to the society as a whole is an inappropriate place for the imposition of user fees. Inland waterways trust fund and water resources development projects
The Administration has proposed increased user fees for both inland waterways and port development projects. The AFL-CIO is concerned that increased costs proposed to be shouldered by the depleted U.S.-flag vessel fleet will cause significant economic hardship to an industry that is in serious economic trouble.
This hearing is designed to begin the dialogue on the potential imposition of a number of user fees and excise taxes. Each of these proposals must be considered individually during any legislative action. In this statement we have set out our general position regarding the imposition of such taxes and fees as well as our comments on a few specific proposals. The comments are not exhaustive and we look forward to working with the Committee in the future to ensure that user fees and excise taxes are imposed only under circumstances where their imposition can demonstrably enhance the availability, allocation and distribution of public goods and services.
STATEMENT OF RUDY VIDAURRI, AMERICAN G.I. FORUM The G.I. Forum represents the interests of Hispanic veterans throughout the nation and especially in the Southwest. The Forum follows state and federal legislation for items we feel are particularly relevant to Hispanic veterans. Excise taxes are relevant.
The American G.I. Forum, Department of California, is adamantly opposed to the principle of excise taxes as it is currently being applied to cigarettes. Excise taxes are regressive and discriminating in nature, artificially inflating the cost of numerous consumables in Hispanic communities and, by doing so, adversely affecting small businesses and/or the economies of Hispanic communities.
The G.I. Forum is not an ultra-conservative, right-wing or leftist organization. We are regular-type people, citizens going about making a living, raising a family, protecting our properties. The Forum was born in protest over the refusal of a community in Texas to bury Mexican-American veterans in “their” cemetery. We are not, on the average, in higher income earning brackets. We pay our taxes.
Many, if not most, of us enjoy our tobacco and alcohol, tastes which were acquired or developed in military service-without taxes. Forum members resent the excise tax on cigarettes and are opposed to the continuation of the 16-cent tax. Forum members feel singled-out and discriminated against on this issue and will continue to oppose excise taxes on cigarettes and other consumables actively.
You will be hearing from us in the future concerning this issue and other relevant pieces of information. Thank you for your consideration.
AMERICAN INSTITUTE OF MERCHANT SHIPPING,
Washington, DC, July 5, 1985. Hon. Dan ROSTENKOWSKI, Chairman, Committee on Ways and Means, House of Representatives, Washington, DC.
DEAR MR. CHAIRMAN: This document is further to our letter of June 14, 1985, wherein we advised that we would be forwarding a position on Coast Guard user fees to you. Due to the complexity of the issue and the degree with which it would impact upon the operations of our Members, it took longer to develop our comments than we would have liked. Please accept our apology for the lateness of this document and, if at all possible, we would request that our comments, as set forth in this document, be made part of the June 19, 1985 hearing record.
The American Institute of Merchant Shipping is a national trade association representing 25 U.S.-flag shipping companies which own or operate approximately 11 million deadweight tons of tankers, dry bulk carriers and other oceangoing vessels engaged in the domestic and international trades of the United States. As such, it endorses certain basic principles or general philosophy, if you will, with respect to the concept of the imposition of Coast Guard user fees. Basically, we consider that U.S. Coast Guard user fees are the same as a tax, however, we are willing to accept such fees as a means of reducing the federal deficit if the following basic qualifications are met:
The fees are equitably assessed and one segment of the maritime community does not bear a disproportionate burden of the cost of a service;
The commercial beneficiaries are specifically identifiable; when the benefits accrue to the general public or national security interest, general funding is appropriate;
The fee should relate to actual use and value of the facility or service provided. The Coast Guard services involved must provide a direct, quantifiable benefit to those receiving the service;
Costs to be recovered by user fees should be accurately identified and levied proportional to actual current costs directly attributable to providing that service only;
Fees should be applied across the board so that the maritime industry is not the only industry affected; user fees should not be imposed so as to upset the competitive balance between transportation modes. In addition, care must be taken to avoid making one port less competitive vis-a-vis another;
Under no circumstances should user fees be imposed for unsolicited inspections on vessels, terminals, pleasure craft, etc. Likewise, inspections or other Coast Guard activities for the purpose of assuring compliance with laws, rules, regulations or treaties should not be subject to user fees. However, inspections and other services requested by the ship or terminal operator should be subject to user fees;
Traditional functions performed by the Coast Guard including, among others, law enforcement, search and rescue, aids to navigation, and military readiness, should not be included in a user fee proposal;
Fees should not be imposed if they might significantly reduce the voluntary use of a service or facility that contributes to health or safety; A procedure wherein Congress budgets operating funds to be raised by user fees (House $50M, Senate $150M) almost guarantees arbitrary and discriminatory fees. Rather than budgeting funds, the first step should be to develop a well defined program outlining all elements in sufficient detail so that equitable fee categories and schedules can be developed; standards developed from principles such as those outlined above should be used to decide whether the user fee should be imposed. Further, industry needs to be able to anticipate and budget for costs which may be assessed under a user fee program.
We cannot support and must work against enactment of H.R. 1936 because it does not follow sufficiently the principles outlined above. It is loosely drawn and could be used in the future as legal authority to expand the fee schedule and to raise the fees so that the users will be unreasonably burdened. Excessive discretionary authority is delegated to the Secretary to determine fee categories and levels; exemptions from fees (Sec. 677) should not be left to the Secretary's dis
cretion. In several respects, H.R. 1936 would not promote efficiency and, in fact, would almost legislate ineffectiveness and waste. e.g., Section 676 which infers that all monies collected must be segregated and, regardless of need, spent for specific purposes.
Section 678 limits the Government liability for the services rendered. If we must pay a fee for services rendered, the Government must be held to a higher level of responsibility for that service than when the service was rendered free of charge. If the Government is not willing to be held to a higher level of responsibility then it has no right to levy fees.
We recommend that enabling legislation be more specific in establishing fee categories and schedules. Further, it should provide for a review mechanism to ensure that future changes to such categories and schedules are equitable and consistent with the intent of the legislation;
We believe a "Users Advisory Committee” is necessary to give users a voice regarding, the design and implementation of the program; the quality/efficiency/cost
effectiveness of the services being performed; and, to provide an opportunity to recommend statutory or administrative changes in the scope of services subject to cost recovery. Such a committee could take steps to ensure that:
The principles outlined previously are followed;
Unsolicited inspections and activities associated and compliance and enforcement actions are exempt from user fee charges;
User fees are equitably distributed;
The performance of services to be covered by user fees should not be the exclusive right of the U.S. Coast Guard. Private industry should have the right to provide such services in accordance with specific requirements and thereby
earn the associated fees. The U.S. Maritime industry is a beleaguered industry and can ill-afford the imposition of additional costs. However, if the Administration and the Congress is determined to impose user fees on us, we urge Congress, before the final step is taken, to see that appropriate studies are made with respect to:
The cumulative economic impact of the proposed Coast Guard user charges together with other user fees being contemplated for commercial vessels, such as port development and operation and maintenance;
The impact of fees on our ability to compete in the export market;
The impact on our export trade of retaliatory action from foreign nations as a result of the impact of Coast Guard user fees on them;
The impact of user fees on vessels in the context of altering their competitive position vis-a-vis other modes of transportation;
The cost effectiveness of the proposed system. We have attached a list of U.S. Coast Guard Roles and Missions identifying those which might, and might not, reasonably be subject to the imposition of equitable Coast Guard user fees.
One of the purposes of H.R. 1936 is to reduce the federal debt, a highly desirable goal which we all support. However, it would definitely have a detrimental economic impact on the entire U.S.-flag merchant fleet, a fleet which already has declined from some 5,000 vessels at the conclusion of world War II to about 650 vessels in 1985.
The economic viability of large segments of the merchant marine is already on the brink of disaster. We cannot impress upon you strongly enough, Mr. Chairman, our concern that the imposition of unrestrained Coast Guard user fees could be the straw that broke the back of many operators. Although one
might argue that the $50 million imposed by Coast Guard user fees in the House Budget Resolution will not mean the demise of the U.S.-flag fleet, we are concerned this would only be the beginning. Once the precedent has been established of allowing imposition of Coast Guard user fees, there is the risk that in subsequent fiscal years the categories will expand and amounts increase so that we will be paying hundreds of millions of dollars for all sorts of Coast Guard activities. We believe this is a genuine concern and that restrictive language should be incorporated into any authorizing legislation to avoid this eventuality.
With respect to NOAA nautical charts, it goes without saying that AIMS Members are, have been, and will be extensive users. To determine what effect a substantial increase in price would have on our Members willingness and ability to purchase nautical charts, we must first know specifically what the cost increase would be. The term “substantial increase” is too general and imprecise. As the cost increases, the users will minimize purchase of these charts, or seek alternative sources. Moreover, since these nautical charts serve a definite military and national defense purpose, and are used by the public and all sorts of governmental bodies, we believe private users should pay for no more than incremental printing and handling. Costs for data base management, etc., are clearly a general governmental function.
This is also a matter of concern to the international community. The non-acceptance of charts and publications of hydrographic organizations other than NOAA has been, and continues to be, a matter of concern in international discussions in the International Maritime and International Hydrographic Organizations. While 33 CFR 164.33 permits acceptance of non-NOAA charts, we have been advised by the International Chamber of Shipping that rejection of such charts by U.S. Coast Guard personnel has become sufficiently commonplace that regular traders to and from the United States feel compelled to equip their ships with NOAA charts, in addition to their normal charts series, as insurance against delay/infringement penalties. Therefore, shipowners would view the proposals set out in Executive Communication 99-631 regarding the prices of the U.Š. nautical products which are the subject of 33 CFR 164.33 to be an exacerbation of an already sensitive area which U.S. spokesmen in the appropriate international forum have endeavored to moderate.
To recapitulate, these nautical charts have a basic military and national security utility, so we urge that the commercial user continue to be assessed only printing and distribution costs.
While we would have much preferred to have appeared as a witness at the June 19, 1985 hearing, we could have not prepared a statement of this magnitude in the time available to us. We do this statement will be helpful, and would appreciate its submittal into the record. Sincerely,
THOMAS J. LENGYEL, President. Attachment.
CATEGORIZATION OF COAST GUARD RULES AND MISSIONS WITH RESPECT TO IMPOSITION
OF USER FEES
USER FEES SHOULD NOT BE IMPOSED UNDER ANY CIRCUMSTANCES
1. Enforcement of laws and treaties
This is a traditional function of government, one which has military and national security ramifications. 2. Short range aids to navigation
Since aids to navigation are used by the Defense Department and the U.S. Navy, the Federal Government has to maintain these aids for National security purposes as well as for use by the general public. Therefore, no justification exists for singling out the commercial user to pay. It would also be extremely difficult, if not impossible, to pinpoint the specific areas of use for which users should pay. 3. Radionavigation
Since the system, including radiobeacons, LORAN C and OMEGA, services both aviation and maritime needs as well as our National security, it should be funded from general revenues. 4. Bridge administration
If any charge is to be made, it should be to the bridge owner. The maritime community should not be charged for this service. 5. Port and environmental safety/marine environmental exposure
These activities are, for the most part, police activities and should be funded from general revenues. One possible exception is the issuance of port security and identity cards. 6. Waterways management
We agree with the statement in the Executive Communication that user fees should not be assessed because "while it may be possible to develop user charges for those vessels which benefit from traffic services, the administrative burden and cost of collecting user fees for the costs attributable to specific user will outweigh the potential recovery. 7. Military operations/preparedness/reserve training
These are all military in nature and operate in the National security interests of the United States. 8. Polar ice operations
We agree with the exclusion of this category in H.R. 1936. Only if private industry specifically requests the service should a user fee be charged. 9. Marine science activities
This is primarily a governmental function not initiated by commercial users.
SERVICES FOR WHICH SOME USER FEES MIGHT BE CHARGED
1. Search and rescue
We would accept the imposition of Coast Guard user fees for search and rescue activities for non-life threatening activites although the case for such fees is not crystal clear and we can envision much difficulty in its application. The areas of search and rescue that are humanitarian in nature are rightfully the responsibility of the Coast Guard.
2. Recreational boating safety
This is not an area of concern for our interests so we will not comment beyond noting the analogy to Commercial Vessel Safety. 3. Commercial vessel safety
It may be argued that the inspections under this category are for the public good and should not be assessed on the user. However, it is the consensus of our Members that we are willing to pay for these inspections, as far as cost recovery is concerned, providing these inspection activities should be conducted by the private sector as much and as soon as possible. Further, users should be asked to pay only for regularly scheduled inspections required for documentation/certification of vessels, and not for non-solicited inspections which are of a “law enforcement nature.” 4. Domestic ice operation
The problem with this category is that it would be difficult to pinpoint the specific areas of use for which users should pay. On the one hand, if a domestic ice-breaking service is requested, the requesting party should pay for it. On the other hand, if for example a community asks for or receives ice-breaking services because it is running out of fuel, food, or nveds it to maintain its general commerce, then the government should pay for this service. One might like ice-breaking services in our northern climes to hurricane watch/warning services in our southern latitudes.
AMERICAN MEDICAL ASSOCIATION
Chicago, IL, June 18, 1985. Re. cigarette tax. Hon. Dan ROSTENKOWSKI, Chairman, Committee on Ways and Means, House of Representatives, Washington, DC.
DEAR CHAIRMAN ROSTENKOWSKI: The American Medical Association would like to offer its support for federal legislation that would repeal the scheduled decrease in the federal cigarette excise tax, increase the tax to 32 cents a pack, and apply a part of the increased revenue to Medicare.
The AMA has joined with an ad hoc group of concerned organizations who also favor a 32 cents a pack cigarette tax for a number of reasons. Evidence demonstrates that, in addition to raising revenue, cigarette taxes discourage cigarette consumption by raising the cost of smoking. Young people and those not yet addicted to tobacco have been shown to be particularly price-sensitive.
The AMA intends to support, at every stage of the legislative process, legislation to accomplish the goal of an increase in the cigarette tax with revenue directed to Medicare. We are optimistic that Congress will act soon on this important matter.
We commend the Ways and Means Committee's consideration of this issue which so seriously affects the health and well-being of the citizens of this nation. Sincerely,
JAMES H. SAMMONS, M.D.
STATEMENT OF THE AMERICAN PETROLEUM INSTITUTE The American Petroleum Institute (API) is pleased to offer comments on H.R. 1936, the Coast Guard user fee proposals. API is a petroleum industry trade organization established in 1919, representing 230 member companies and 6,000 individual members.
The scope of the proposed user charges in H.R. 1936 would affect a broad range of petroleum industry activities including marine operations, refining, oil and gas exploration and production. API member companies are willing to accept their fair share of the costs of non-regulatory Coast Guard services, which provide benefits to a specific user. An indispensable element of user fee legislation is that there be equitable treatment of different segments of industry, and different transportation modes within each industry segment. This principle is especially important when user charges for federal services are imposed on one transportation mode before they are imposed on competing modes.
API support of fair share user fees is contingent on inclusion of the following points in any legislation:
Costs of required services must be shared equitably and uniformly by all beneficiaries of those services. In this context, clearly this should include military, state and other government vessels; vessels owned by foreign governments;