Daniel Inouye: “Mr. Presdient, foreign registered ships now carry 97 percent of the imports and exports moving in United States…”

“Mr. Presdient, foreign registered ships now carry 97 percent of the imports and exports moving in United States international trade. These foreign vessels are held to lower standards than United States registered ships, and are virtually untaxed. Their costs of operation are, therefore, lower than United States ship operating costs, which explains their 97 percent market share. Three years ago, in order to help level the playing field for United States-flag ships that compete in international trade, Congress enacted, under the American Jobs Creation Act of 2004, Public Law 108-357, Subchapter R, a ``tonnage tax'' that is based on the tonnage of a vessel, rather than taxing international income at a 35 percent corporate income tax rate. However, during the House and Senate conference, language was included, which states that a United States vessel cannot use the tonnage tax on international income if that vessel also operates in United States domestic commerce for more than 30 days per year. This 30-day limitation dramatically limits the availability of the tonnage tax for those United States ships that operate in both domestic and international trade and, accordingly, severely hinders their competitiveness in foreign commerce. It is important to recognize that ships operating in United States domestic trade already have significant cost disadvantages.…”