Put the tax back on marine bunker fuel to help the environment
Okay. It sounds “wonky” and probably few readers even know what in the world “marine bunker fuel” is and why it should no longer be exempted from the full “sales and use tax” or SUT, but here goes my explanation.
The south coast region of California is starting to finally wake up about the devastation that is being done to the health of our residents and the environment of our neighborhoods by the “movement of goods” through the Ports of Long Beach and Los Angeles. This point was brought home several times during State Senator Alan Lowenthal’s “Town Hall to Discuss Funding Soutions for our Public Health Crisis” which I attended last year at CSULB.
During the Town Hall, the South Coast Air Quality Management District, then the Environmental Health Sciences Center at USC Keck School of Medicine, and finally the Los Angeles Economic Development Corporation provided presentations about the impacts on the health of people who live in Long Beach and cities along the corridor on which the goods from the ports flow are getting sick and sicker from the toxic emissions from the “movement of these goods.”
There was much talk at the “town hall” about how we can finance a solution to the public health crisis created by port pollution — especially about the imposition of a “cargo container fee.” (That bill raised serious federal constitutional issues about imposing a fee on a container that goes across international waters and then on to other ports.) Bonds and other financing proposals were also discussed.
None of the presenters talked about going after one source of the health problems — the fuels used by ocean-going vessels or “marine bunker fuel” as it is known. So I stepped up to the microphone and suggested that if we are really serious about doing something about the pollution caused by “goods movement” then perhaps: a) the state legislature should rescind the law it passed in 2003 exempting a large portion of the tax charged on marine bunker fuel; and b) increase the tax on marine bunker fuel and use that increase to fund environmental efforts to clean up the pollution.
The ships that come into our port are powered by “marine bunker fuel.” This fuel is made from the very end products of the oil refining process, formulated from residues remaining from the primary distilling stages of the refining process. This fuel is dirty. The reason the toxic emissions from ships are so noxious is that “marine bunker fuel” is loaded with relatively high sulfur content. This fuel burns “dirty” leaving behind particulate matter, sulfur dioxide and nitrogen oxide — all things that cause asthma, lung cancer and cardiovascular disease — not to mention that residue on our windows and cars.
Bunker fuel produced in California is largely based on Alaskan crude oil refined in the San Francisco area. Foreign produced marine bunker fuel is also shipped to the west coast ports for use by ships.
So, if we know that this dirty, noxious fuel is the cause of serious health problems, then why oh why doesn’t California tax it fully and use a portion of the tax to fund environmental and health programs?
It is amazing to me that the shipping industry can be held liable for spills of bunker fuel into the ocean, but not for “spilling” the toxic ingredients of this fuel into the air.
So what about taxing bunker fuel? The California State legislature did an interesting thing in 2003 when it passed Senate Bill 808 to reinstate California’s sales tax exemption for bunker fuel purchased in California. The exemption provides that the state does not tax fuel consumed after the first out-of-state destination of the ship. For instance, the calculation of the taxable portion is based on the “first in” “first out” inventory. If 2,000 tons of bunker fuel were required for a ship to reach its first destination outside of California, and it had 1,000 tons of fuel on board before it reached California, the first 1,000 tons of fuel purchased in California would be subject to the tax. Without the exemption, the entire amount of the fuel purchased in California would be subject to the SUT.
The State’s Sales and Use Tax (SUT) is fully assessed on other fuel purchases by air and rail carriers.
Reinstate the full tax and possibly increase it. Unless we do something about the source of the pollution, its devastating impact will continue.
