Federal Approach to Financing the Marine Transportation System as Compared with the Aviation and Highway Systems

Unlike the funding approach used for the aviation and highway transportation systems, which are primarily funded by collections from users of the systems, the commercial marine transportation system relies heavily on general tax revenue. During fiscal years 1999 through 2001, customs duties on imported goods shipped through the transportation systems averaged $15.2 billion each year for the marine transportation system, $3.7 billion for the aviation system, and $928 million for the highway system. However, unlike transportation excise taxes, customs duties are taxes on the value of imported goods paid by importers and ultimately their consumers—not on the users of the system—and have traditionally been viewed as revenues to be used for the support of the general activities of the federal government. Systematic Framework Could Help Guide Decisions When Making Investment Choices for the Marine Transportation System

Some maritime industry stakeholders have suggested that substantial new investments in the maritime infrastructure by federal, state, and local governments and by the private sector may be required because of an aging infrastructure, changes in the shipping industry, and increased concerns about security. These growing and varied demands for increased investments in the maritime transportation system heighten the need for a clear understanding about the federal government’s purpose and role in providing funding for the system and for a sound investment approach to guide federal participation. In examining federal investment approaches across many national activities, we have found that issues such as these are best addressed through a systematic framework. Chairmen, the projected increases in freight tonnage will likely place pressures on the nation’s surface transportation systems. Therefore, there is a need to view various transportation modes from an integrated standpoint, particularly for the purposes of developing and implementing a federal investment strategy and alternative funding approaches.
Why GAO Did This Study

This testimony discusses challenges in defining the federal role with respect to freight transportation issues.

What GAO Found

There are concerns that the projected increases in freight tonnage for all transportation modes will place pressures on the marine, aviation, and highway transportation systems. As a result, there is growing awareness of the need to view various transportation modes, and freight movement in particular, from an integrated standpoint, particularly for the purposes of developing and implementing a federal investment strategy and considering alternative funding approaches. The federal approach for funding the marine transportation system relies heavily on general revenues, although the approach for funding the aviation and highway systems relies almost exclusively on collections from users of the systems. During fiscal years 1999 through 2001, customs duties on imported goods transported through the transportation systems averaged $15 billion each year for the marine transportation system, $4 billion each year for the aviation system, and $900 million each year for the highway system. Customs duties are taxes on the value of imported goods and have traditionally been viewed as revenues to be used for the support of the general activities of the federal government. Diverse industry stakeholders believe that substantial new investments in the maritime infrastructure may be required from public and private sources because of an aging infrastructure, changes in the shipping industry, and increased concerns about security. A systematic framework would be helpful to decision makers as they consider the federal government's purpose and role in providing funding for the system and as they develop a sound investment approach to guide federal participation. In examining federal investment approaches across many national activities, GAO has identified four key components of such a framework--establishing national goals, defining the federal role, determining appropriate funding tools, and evaluating performance--which could potentially be applied to all transportation systems.