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BARGE INDUSTRY IS TARGET OF 525 PERCENT FUEL TAX INCREASE; DAILY COST INCREASE WOULD BE $20,000 PER DAY, PER VESSEL

 WASHINGTON, Feb. 21 /PRNewswire/ -- A federal user tax proposal optimistically characterized by the barge industry as "an error born of lack of understanding," would saddle the inland waterway transportation industry with a 525 percent fuel tax increase and would double operating costs for companies transporting freight on the nation's inland waterways -- a result industry leaders call "catastrophic."
 The waterway user tax proposed by the administration Feb. 18 would raise the diesel fuel tax burden on the inland barge industry from 19 cents per gallon to $1.19 per gallon -- a 525 percent hike.
 "The immediate impact of such a tax is not speculation, but pure fact," said Joe Farrell, president of the American Waterways Operators, in an appeal to the secretaries of the Treasury, Transportation and Agriculture, and to the director of the Office of Management and Budget. "An average towboat that uses 5,000 gallons of fuel per day, would see its fuel costs, which are half of its operating cost, skyrocket by $5,000 per day! The cost of a typical 14-day trip carrying grain, corn or soybeans from Minneapolis to New Orleans would increase by $70,000! A lower Mississippi River towboat would see its fuel costs soar to over $20,000 per day, from half that amount. Clearly for an industry already operating at very slim margins, or at below cost, the result would be catastrophic."
 The inland waterways industry transports 15 percent of the nation's freight, over half of all export grain, a fourth of all coal and over 30 percent of the nation's petroleum products. Its vessels deliver agricultural fertilizer to farmers, grain to food producers and export ports, building materials to construction sites, iron and steel to factories, coal to electric generating plants, home heating oil and gasoline to millions of Americans.
 "The cargoes carried by this safe, fuel-efficient and largely invisible industry, go to all sectors of the American economy. ... The economic implications of this tax plan are not just reduced profits and increased costs for the waterways industry -- but certain business failures, unemployment and spiraling transportation prices. The resultant transportation costs increases must of necessity be passed on by the users of the inland waterway transportation industry -- the farmers whose grain we ship, the manufacturers whose raw materials and semi-processed goods we transport, producers of electricity, of home heating oil, of building materials. Factor in also that the majority of America's grain exports are transported by water and that these increased costs will unquestionably make the nation less competitive in the international marketplace. All of these components make up an economic blow that will hit squarely at American consumers," Farrell's letter states.
 "I assume this tax proposal is an error born of lack of understanding. The American Waterways Operators asks you to reconsider; give us the opportunity to convince you of the many- faceted error in this, and of the widespread harm it would bring," Farrell's letter states. The American Waterways Operators is the national trade association of the inland and coastal barge and towing industry.
 -0- 2/21/93
 /CONTACT: Jeffrey A. Smith or Curtis E. Whalen of the American Waterways Operators, 703-841-9300/


CO: American Waterways Operators ST: District of Columbia IN: TRN SU:

DC -- DCSUN3 -- 8725 02/21/93 12:00 EST
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Date:Feb 21, 1993
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