FULL TEXT: COMMITTEE REPORT ACCOMPANYING H.R. 5661, WHICH CONCERNS EXEMPTIONS FROM WATER TRANSPORT TAX.

H.R. 5661 would offer an exemption to ferry rides of less than 12 hours between U.S. ports or between a U.S. port and a foreign port. The report estimates that the measure would cost $8 million in revenues over five years.

I. EXPLANATION OF ThE BILL

EXEMPTION FOR CERTAIN FERRIES FROM EXCISE TAX ON SHIP PASSENGER DEPARTURES (SEC. 4472 OF THE CODE)

Present Law

An excise tax of $3 per passenger is imposed on ship passenger departures on a "covered voyage." A covered voyage includes transportation on (1) a commercial passenger vessel which extends over one or more nights, or (2) a commercial vessel transporting passengers engaged in gambling aboard the vessel beyond the territorial waters of the United States (i.e., more than 3 miles from shore) during which passengers embark or disembark the vessel in the United States. The latter circumstances includes such vessels that leave a U.S. port and return the same day.

The tax does not apply to either (1) a voyage on any vessel owned or operated by the United States or a State or local government (e.g., State or local government ferry boats), or (2) a voyage of less than 12 hours between two U.S. ports. A passenger vessel is any vessel having a berth or stateroom accommodations for more than 16 passengers. The tax is imposed only once on a passenger's covered voyage-either upon embarking or disembarking.

The tax on ship passengers was enacted in the Omnibus Budget Reconciliation Act of 1989, effective on January 1, 1990. Revenues from this tax go to the General Fund of the Treasury.

Reasons for Change

The committee believes that the current exemption for voyages of less than 12 hours between 2 U.S. ports generally should be expanded to also include ferry boat voyages of less than 12 hours between a port of the United States and a port outside the United States.

Explanation of Provision

The bill expands the current exemption from the ship passenger tax for voyages of less than 12 hours between 2 U.S. ports to also include ferry boat voyages of less than 12 hours between a port in the United States and a port outside the United States. For this purpose, the term "ferry boat" means any vessel if normally no more than 50 percent of the passengers on any voyage of such vessel return to the port where such voyage began on the first return of such voyage to such port.

Effective Date

The provision applies to voyages beginning after December 31, 1989, except that no refund of any tax paid before the date of enactment shall be made as a result of this provision.

II. BUDGET EFFECTS OF THE BILL

In compliance with clause 7 of Rule XIII of the Rules of the House of Representatives, the following statement is made about the effect on the budget of this bill, H.R. 5661, as reported.

The estimated budget effects of the bill for fiscal years 1992- 1997 are as follows:

               [By fiscal years, millions of dollars]

A. VOTE OF THE COMMITTEE

In compliance with clause 2(l)(2)(B) of rule XI of the Rules of the House of Representatives, the following statement is made about the vote of the committee on the motion to report the bill, H.R. 5661. The bill was ordered favorably reported by voice vote.

B. OTHER MATTERS

In compliance with clause 2(l)(3) and 2(l)(4) of rule XI of the Rules of the House of Representatives, the following statements are made with respect to the committee action on H.R. 5661.

Oversight findings

With respect to subdivision (A) of clause 2(l)(3) (relating to oversight findings), the committee advises that it was as a result of the committee's oversight activities with respect to the application of the excise tax on ship passenger departures to certain ferry boat operations that the committee concluded that it is appropriate to enact the provisions contained in the bill.

Tax expenditures

With respect to subdivision (B) of clause 2(l)(3), after consultation with the Congressional Budget Office, the committee states that the changes made to existing law by this bill as reported involve no new or increased tax expenditures.

Budget authority

With respect to subdivision (B) of clause 2(l)(3), after consultation with the Congressional Budget Office, the committee states that the changes made by the bill as reported involve no new budget authority.

Congressional Budget Office estimates

With respect to subdivision (C) of clause 2(l)(3), the committee advises that the Congressional Budget Office has examined the committee's budget estimates (as indicated in Part II of this report) and submitted the following statement:

U.S. CONGRESS,

The bill would provide that the international water transportation departure tax does not apply to certain voyages of less than 12 hours between a U.S. port and a foreign port when no more than 50 percent of the passengers complete both the inbound and outbound portions of the voyage. The Joint Committee on Taxation estimates that this bill would cause a decrease in receipts of $1 million each year in 1992 through 1995, a decrease in receipts of $2 million each year in 1996 and 1997, and a decrease in receipts of $8 million over the 1992 through 1997 period. CBO concurs with these estimates.

                           BUDGET EFFECTS

                    PAY-AS-YOU-GO CONSIDERATIONS

Sincerely,

ROBERT D. REISCHAUER,

The applicable cost estimate of this Act for all purposes of sections 252 and 253 of the Balanced Budget and Emergency Deficit Control Act of 1985 shall be as follows:

               [By fiscal year, in million of dollars]

With respect to subdivision (D) of clause 2(l)(3), the committee advises that no oversight findings oil recommendations have been submitted to the committee by the Committee on Government Operations regarding the subject of this bill.

Inflationary impact

In compliance with clause 2(l)(4), the committee states that the enactment of this bill is not expected to have any inflationary impact on prices and costs in the operation of the national economy.

IV. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3 of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill, as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, existing law in which no change is proposed is shown in roman):

[Due to online limitations, bracketed material has been omitted, new material is not emphasized by capitalization.]

SECTION 4472 OF THE INTERNAL REVENUE CODE OF 1986

SEC. 4472. DEFINITIONS.

For purposes of this subchapter --

(1) COVERED VOYAGE. --

(A) * * *

(B) EXCEPTION FOR CERTAIN VOYAGES. -- The term "covered voyage" shall not include --

(i) a voyage of a passenger vessel of less than 12 hours between 2 ports in the United States, and

(ii) a voyage of less than 12 hours on a ferry between a port in the United States and a port outside the United States.

For purposes of the preceding sentence, the term "ferry" means any vessel if normally no more than 50 percent of the passengers on any voyage of such vessel return to the port where such voyage began on the 1st return of such vessel to such port.

* * * * * * *