PLAN LEAVES BARGES UP RIVER; RIVER INDUSTRY FIGHTS 525 PERCENT TAX INCREASE ON FUEL

Before Bill Clinton left Little Rock for Washington, officials of one of the nation's important freight transportation networks the barge industry were primarily occupied with checking on locks and dams along major waterways.

Now, the Clinton Administration has given waterways officials another worry that could bring the barge industry to its knees.

One of Clinton's budget proposals calls for a 525 percent increase in the existing waterways fuel tax paid by inland waterway towing companies.

The increase would be phased in over a period of four years, starting with fiscal year 1994.

"That's an increase in the tax from 19 cents to $1.19 cents for every gallon of diesel fuel that towing companies use," Jeffrey A. Smith said Friday. "This tax, if enacted, would confiscate 25 percent of the industry's revenues."

Smith, vice president of the American Waterway Operators, headquartered in Washington D.C., voiced his concern further.

"No industry in America could withstand such a huge tax increase," he said. "It would be devastating."

Simple math will explain why, Smith added.

"A rule of thumb is that a tow boat will use a gallon per horsepower per day. That means a 7,500 horsepower towboat will burn 7,500 gallons of diesel fuel each day, which means it will cost that towboat company an additional $7,500 a day," said Smith. "Figure it takes 14 days from Minneapolis to New Orleans. The increased cost for that trip is more than $100,000."

Smith is worried these days.

"What concerns me is that this tax will get lost in the budget shuffle," he said. "The bill is sitting there like a time bomb. We're just a small entity compared to the total budget, and we could get rolled up in the budget process."

Many people realize the impact of the bill, claims Smith.

"As many as 70 newspapers, including those in New Orleans, Houston, St. Louis, Cincinnati, and the Washington Post support eliminating this tax," said Smith. "Even Bill Clinton's hometown newspaper, The Arkansas Democrat Gazette at Little Rock, calls it a ~`Torpedo Tax.'"

Clinton himself has suggested that the proposed tax was not supposed to have been that stiff, said Smith. "Clinton told a CBS interviewer that the bill should be re-examined," said Smith, adding that on March 18, the U.S. Senate passed a resolution by an 88-12 vote to support removing the tax increase proposal from the administration's economic package.

"But, it's still there," said Smith. "And the economic package is heading to the Ways and Means Committee Monday. After the budget bill clears Ways and Means, it goes to the Senate Finance Committee, and from there to the floor of the House and Senate.

"It could be taken out somewhere along the way," said Smith. "But we're concerned that because of the size of the overall tax package, it will be overlooked.

If this happens, he maintains, the entire barge industry could be destroyed.

Both Rep. Bill Emerson (R-Cape Girardeau) and Christopher "Kit" Bond (R-Mo.) oppose the proposed barge fuel tax.

"By unfairly singling out this industry so vital to our nation's transportation network the administration is prescribing a serious blow to the viability of American agriculture, particularly farmers who rely on our waterways to transport their goods," said Emerson.

"There is no way the barge industry can be expected to absorb these exorbitant tax hikes."

Emerson is the second ranking Republican on the House Agriculture Committee, and a senior member on the House Public Works and Transportation Committee.

The American Waterways Operators, a national trade association of the inland and coastal barge and towing industry, reports that more than half of all exported grain is transported by the nation's inland waters, and more than 75 percent of that is transported down the Mississippi River.

"Quite simply, American agriculture's future and its related jobs are being put into jeopardy by the president's proposal," said Emerson.

Bond recently criticized the proposed inland waterways user fee, saying it would "destroy barge industries serving our nation" and have a detrimental impact on agriculture. The fuel tax proposed for the river industry "is greater than the profits of the barge industry," said Bond.

C.W. "Woody" Rushing of Cape Girardeau, a longtime Southeast Missouri Port commissioner, and a riverboat pilot who with his son helps manage four tow boats, said use taxes on their four boats would increase from $2,900 a day to $19,000 a day under Clinton's tax proposals. Rushing said he would have no choice but to pass those costs on to others.

The U.S. inland water transportation industry is composed of more than 800 towing companies carrying bulk liquids and dry cargoes, including petroleum products, coal, chemicals, grain and building materials.

"The industry provides employment to approximately 180,000 Americans," said Smith. "The industry moves 15 percent of the nation's freight.

"The industry is a great asset to the Midwest, including the Cape Girardeau area," said Smith. "Inland towing hauls about two thirds of all grain exported by the U.S., and the cost of transportation grain down the MIssissippi River to New Orleans would increase as much as 120 percent with this tax. This would cripple U.S. grain exports which move via barge."

The barge industry moves 20 percent of all coal produced in the U.S. At least 80 percent of the nation's petrochemical plants are located along the Gulf Coast, and are dependent on barges for many of their raw materials, and for movement of finished industrial chemicals to the Midwest and to ships for exports.

"Tows are a primary mover of goods as they slip through locks and dams along inland waters," said Col. David E. Peixotto, a district commander of the Corps of Engineers in Louisville, Ky. "And in this particular area of the Ohio River, more than 10,000 tows a year, handling more than 83 million tons of goods, pass, either upbound or downbound."