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Other industry experts, however, have maintained that given the long operating life of a ship,these higher costs would add little to the cost of each trip. A July 2005 GAO report askedone SSS operator whether the Jones Act requirements for the vessels to be U.S.-built were apotential obstacle to expanding service, given that U.S. construction costs may be moreexpensive than foreign-built vessels. The operator responded that these requirements did notpose a burden, but that the USCG crewing requirements that mandate unnecessarily largecrews for SSS operations increase the costs significantly. 786-1-2 Harbor Maintenance Tax (HMT) Raises the Costs of Shipping aContainer by WaterHarbor Maintenance Tax (HMT), a general ad valorem tax on the cargo value (0.125percent) levied on the value of all waterborne cargo loaded or unloaded at a port, is imposedby §26 U.S.C. 4461 and 19 C.F.R. §24.24. The tax is paid by the shipper or the productimporter. Exports have been exempted by the Supreme Court ruling from paying the tax.Cargo entering at ports in Alaska, Hawaii, and Puerto Rico is also exempt from the fee. Fordomestic shipments, the fee is levied at only one port – either the port of departure or the portof entry, but not both – and it does not normally apply to movements along the inlandwaterways as long as the ship moving the goods is subject to the Inland Waterways Fuel Tax(19 C.F.R. §24.24 (C0 (5) and 25 U.S.C. § 4042. 79An import container that is offloaded at a port and again loaded on a marine vessel for theinland leg of the journey is charged the HMT twice. The HMT adversely impacts growth inSSS operations because the fee, imposed on each leg of the movement of an importcontainer, taxes the same load twice: once at the arrival port and again at the inlanddestination port when unloaded for domestic distribution or feedering. The HMTdiscourages SSS since equivalent truck transportation of a load does not involve similar fees.The fee is intended to pay for harbor dredging. Containers account for much of the revenuegenerated given the higher value of cargo shipped in containers, even though the tax appliesto both containerized and bulk cargo. The proceeds of the HMT go into the HarborMaintenance Trust Fund (HMTF), which is used to reimburse the cost of maintenancedredging of federal channels and to cover operations of the St. Lawrence SeawayDevelopment Corporation. Industry experts have maintained that HMT may not be the bestmethod of financing waterway improvements because currently HMTF is taking in muchmore revenue than is being appropriated, with a growing balance of about $3 billion. 80Devising a more efficient system for charging user fees and congestion pricing would be agood alternative to the existing HMT fee system.78 GAO, “Freight Transportation: Short Sea Shipping Option Shows Importance of Systematic Approach toPublic Investment Decisions,” July 2005, GAO-05-76879 GAO, July 2005.80 Other potentially more efficient methods of pricing container shipments to pay for container processingcosts are the charges imposed by West Coast container ports for congestion pricing by charging fees percontainer during peak hours, e.g., the PierPass fee system at the ports of Los Angeles/Long Beach.ONR SSS Final Report 68