Proposed state tax increase threatens cargo and jobs

April 18, 2013 

The Port of Tacoma has played an important role in our community for almost a century. Our natural deep-water port is a magnet for global trade and a significant economic driver within our state. The port is one of the pillars by which we have built our city and county. Our state receives enormous economic benefits that come from being a big-time center for cargo logistics.

We’re fortunate that Pacific Northwest ports have thrived in a very competitive arena, an arena that is becoming more competitive all the time. Other communities hosting growing ports — from Canada to the U.S. East Coast — would like to take the cargo moving through our region and the jobs that are created through trade. They are investing billions of dollars in new facilities and offering companies cash incentives to attract cargo — and the jobs and economic benefits — to their ports.

Unfortunately, as if the competitive threats from other ports aren’t enough, we now face a new threat from within our own state.

The Legislature has introduced a dramatic increase in the state business and occupation tax on the companies that load and unload cargo, as well as the public utility tax on the companies that move that cargo through the state.

It’s an idea that couldn’t come at a worse time. Other states are doing just the opposite.

Port Metro Vancouver, B.C., is providing a $10 per box incentive to lure cargo from Washington state. The ports of Long Beach, Calif., Portland and Virginia are offering similar deals. The states of Georgia, Virginia and South Carolina are offering millions in tax incentives, including tax credits for every employee hired, along with investment and manufacturing tax credits, and tax credits tied to increased cargo volumes through the ports.

The tax rate for the international trade sector in Washington was established decades ago because legislators recognized that the incentive pays back many times over in the way of jobs created and taxes generated by a thriving economy. They also recognized that increasing taxes on trade would drive that cargo – and the jobs associated with it – out of the state.

This diversionary impact of taxing trade was validated by both the Legislature’s Joint Transportation Committee and the U.S. Federal Maritime Commission. The Joint Legislative Audit and Review Committee agreed on Feb. 10, urging that the B&O tax rate continue without modification, as it is “one tool for increasing the competitiveness of our ports, which are major sources of jobs and economic growth.”

Instead of making the Pacific Northwest less competitive with increased taxes on trade, we need to work together with our leadership within the state to find new ways to make it easier and more competitive for small businesses and farmers to gain access to markets. We have confidence that our Legislature will make wise choices to support the growth of trade within our region and the job growth that comes with it.

Let’s grow the economy – which generates more taxes – instead of putting up new barriers that restrict economic growth.

At the Port of Tacoma, we are working together — the port authority, labor and the private sector — to be competitive and grow the cargo that supports the jobs and economic development throughout our state.

A tax increase on trade is a bad idea.

John Wolfe is CEO of the Port of Tacoma. Scott Mason is president of International Longshore and Warehouse Union Local 23.

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