Lesson for cap and trade in bunker fuel tax – Orange County Register

Now that we’re a couple of weeks from when Gov. Jerry Brown signed into law Assembly Bill 398, the cap-and-trade tax, it’s a good time to think about what will happen.

While discussing the bill on the state Senate floor, I recalled what happened in the early 1990s with the tax on marine bunker fuel, which is fuel held in ships’ “bunkers.”

I reminded my colleagues that we might even start seeing black-market gas. I remember Pete Wilson, when he was governor, raised the bunker-fuel tax in 1991. The tax went up for all the ship-liners that came into our ports. And what happened was that all these ships decided to fuel in Washington and Oregon and Mexico. They didn’t fuel in California, so the state’s tax revenues dropped like a rock.

In 1992, the Los Angeles Marine Exchange calculated nearly 100 ships a month bypassed Los Angeles and Long Beach rather than pay the 8.25 percent tax on bunker fuels. For July 1992, the volume of bunker fuel delivered to both ports dropped 68 percent from July 1991.

“This harbor has become a ghost town,” said Bob Forrester, regional director of the Inland Boatmen’s Union. “It’s terrible how many ships are passing us by.”

In September 1992, the Legislature passed a law suspending the tax increase. The Los Angeles Times reported up to 1,100 jobs could be saved. Wilson signed the bill.

Since then, the bunker-tax exemption periodically has been extended. And guess who in September 2012 signed the last extension until 2024? None other than Gov. Jerry Brown.

“We’re very pleased Gov. Brown understood this legislation is needed to keep the marine fuel industry alive and well in our state,” said John Berge, vice president of the Pacific Merchant Shipping Association, at the time. Berge noted that the bill had strong bipartisan support and the Legislative Analyst’s Office warned that not signing the extension would kill even more jobs.

Speaking of the LAO, although it cautions the exact costs of AB398 are…

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