Hawaii Business Welcomes California Container Tax Delay

by Leroy Baker, Tax-News.com, New York

12 September 2007

The Chamber of Commerce of Hawaii has welcomed the the recent announcement by California Governor Arnold Schwarzenegger that a legal bill, proposing a tax on container traffic between the two states, has been delayed until the state’s next legislative session.

Senate Bill 974, known as California’s container tax bill, would have imposed a fee of $30 per 20-foot equivalent unit on every cargo container traveling between California and Hawaii. Approximately 1.1 million containers bound for Hawaii move through California ports each year, and the Hawaii Chamber stated that this would result in a direct assessment of around $34 million per year. In addition, the processing fee would have been charged again when the container was emptied and returned to a California port, doubling the direct assessment on consumers, totalling $68 million.

Currently, 90% of Hawaii’s goods come through California ports, and the Chamber warned that the legislation will have had a negative impact on Hawaii's economy and the maritime industry, as well as raising the cost of living for Hawaii's people.

“The delay of this bill is very positive for the State of Hawaii,” explained Jim Tollefson, President & CEO of The Chamber of Commerce of Hawaii. “From the moment our Maritime Committee Chair, Kraig Kennedy, made us aware of the bill last March, the Chamber went into action. We knew it was critical that this was brought to the attention of our members, the business community, and our government officials."

“Because the bill was being addressed in the California State Legislature, we had discussions with the California Chamber, the Long Beach Chamber, the Los Angeles Chamber, and other organizations that also opposed the bill," he added.

Tollefson said that another key component of this campaign was Hawaii Governor Linda Lingle’s letter to Governor Schwarzenegger, requesting him to consider vetoing SB 974. The letter emphasized that such legislation would have unintended consequences and an adverse impact on Hawaii’s economy and its consumers.

While the bill is likely to be presented again in the 2008 legislative session in California, Tollefson suggested that the delay will give the business community time to "engage in meaningful dialogue and help develop a more workable bill".

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