The US Chamber of Commerce denounced a measure hidden in the Technical Corrections Act that would repeal the tonnage tax option for US flagged ocean carriers hauling cargo between the mainland and Puerto Rico thus increasing shipping costs and making American ships less competitive in the global marketplace.

The tonnage tax option was originally enacted as part of the JOBS Act of 2004 to level the playing field for US flagged ships that have to compete against heavily subsidized foreign carriers transporting products which are often produced at a reduced cost overseas- lowering their potential cargo tax liability.

Those same carriers are traditionally allowed by their home countries to pay tax based on alternative tonnage regimes so the Chamber believes US flagged carriers including those in the Puerto Rico trade lane should be allowed to use the tonnage regime also.

Most damaging in the current proposal is a provision to make the repeal retroactive. The Chamber consistently opposes retroactive tax increases because they are inherently unfair to businesses that follow the stated law, are detrimental to economic and job growth, and are a failure from a due process perspective.

“At the very moment we need to help make US carriers more competitive in the global marketplace this tax plan is not only penalizing our own shipping companies it is doing so retroactively breaking the legal and financial arrangements the Congress put in place and making it harder for American companies to expand, grow and plan for the future,” said Martin Regalia, vice president of economic policy and chief economist for the US Chamber.

“American jobs are on the line with every tax increase that is proposed and the Chamber intends to fight against every flawed plan like this one.”

The US Chamber is the world’s largest business federation, representing more than three million businesses and organizations of every size, sector, and region.