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Schwarzenegger - "I think taxes, er fees, are good"
Posted by: McQ on Thursday, December 20, 2007

Amazing what a little fiscal crisis can do to change the "Republican principles" of a certain governator:
Days after port authorities approved a $35 environmental fee on containers shipped through Southern California's harbors, Gov. Arnold Schwarzenegger said Wednesday that he would support a similar fee at the state level.

Schwarzenegger, who previously said container fees would hurt the economy, now considers them an option to help fund trade-related infrastructure and environmental programs.

"I think fees are good; we just have to work it out with the various stakeholders," Schwarzenegger said during a visit with U.S. Treasury Secretary Henry Paulson Jr.

"It's extremely important that we find a way to create economic development and increase trade, but at the same time take care of our environment."
Environment my @ss. More like taking care of a sudden "deficit".
The estimated $500 million generated annually would be spent on infrastructure projects such as rail improvements and programs that reduce the health impact of air pollution caused by the transportation industry.
What a load of Schwarzenegger. If you believe that's what it will go toward, I have a bridge in Brooklyn in which you might be interested.

Meanwhile, Obama says Arnie might be a fit in his cabinet. Head of the newly created "Department of Fees" no doubt.
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Previous Comments to this Post 

Isn’t the real problem that he can’t cut taxes because nearly all the spending is mandatory? What alternative does he have to raising taxes?
Written By: MichaelW
I will defend him to this extent, these fees, amounting to a tariff are spread to all the consumers of the nation and are therefore not as harmful to growth in his state as a tax increase would be.
Written By: kyleN
What alternative does he have to raising taxes?
Well, for one, not approving new spending for state run health coverage.
Written By: McQ
Well, for one, not approving new spending for state run health coverage.
No new spending, sure. But is that the problem? I thought it was more structural than that.

I’m asking because I don’t know. In the past several years though I’ve read warnings of a looming budget crisis in California because of all the mandatory spending. That may have been overblown, and it may be that new spending is the real problem. I just don’t know.
Written By: MichaelW
Check out the first link in the story, and then consider that against the Gov’s newfound love of these fees, fees he previously said he was against.
Written By: McQ
Guess what. There already are fees for every single port in the world (for both export and import.) That’s how they make money. And yes, ports produce externalities in the form of increased traffic and pollution, that might justify some taxes.

That said, Taiwan’s port taxes used to be fairly high - I forget the amount, but it was such a high percentage that I included it in my cost form. Now its 0.04% of FOB value (yes still on my form, though, always pass on your costs baby!) and I suspect its because the government realized that lower port fees could help Taiwan exports. It’s not like Kaoshiung port suddenly became 75% cheaper.

Quick question: will this fee apply to exported containers or just imports?

If only on one side, I bet it will get into WTO trouble.

Written By: Harun
URL: http://
And is this a stealthy way to introduce a consumption tax?

Maybe I will review my data and let you know how much this will cost....
Written By: Harun
URL: http://
40’ container. 22 pallets. Each holds 70 precious cases of 12 oz. bottled beer.

US$ 35.00 charge per container.

The cost per bottle is not even at 0.01 cent. (Not one cent, but 1/100th of a cent.)

Not justifying the "fee" - just allaying the fear that must be on every imported beer drinkers mind.

Just for comparison’s sake, the alcohol tax in Taiwan on every 12 oz. bottle of beer is about US$ 0.27. This is after 1.6% import duty, but before 5% VAT. (All of this after the WTO made them apply the alcohol tax to domestic products, not just imports.) Which is why California microbrew retailed for US$ 16.00 / six pack...

Written By: Harun
URL: http://
Check out the first link in the story, and then consider that against the Gov’s newfound love of these fees, fees he previously said he was against.
OK, fair enough regarding his switch on being against fees. But if you go to the news story it says this:
State spending also has increased by more than 40 percent since Schwarzenegger took office after the 2003 recall of then-Gov. Gray Davis.

Schwarzenegger in August signed a $145.5 billion budget that increased spending 11 percent due largely to the increased cost of bond repayments and special funds. General fund spending for day-to-day operations increased less than 1 percent, from $101.7 to $102.3 billion for the budget year that began July 1.
Also note that more than two thirds of the budget goes to day-to-day operations of the government.

If you go back to the August new story regarding Schwarzenegger’s signing of the budget, you find that he actually trimmed (a modest) $700 million from the budget:
Gov. Arnold Schwarzenegger on Friday signed California’s overdue spending plan after using his veto power to trim $700 million and temporarily eliminate the state’s operating deficit....

Republicans considered Schwarzenegger’s promised line-item vetoes to eliminate the operating deficit as a victory. But the most conservative lawmakers warned that the governor’s cuts would at best provide only temporary relief.

Schwarzenegger vetoed $703 million before signing the spending plan. He said the budget fully funds public education, which accounts for nearly half of general fund spending, and public safety. Health and human service programs account for the second largest chunk of state spending.
One other interesting tidbit is that, according to the more recent story:
State spending also has increased by more than 40 percent since Schwarzenegger took office after the 2003 recall of then-Gov. Gray Davis.
However, in August, when Schwarzenegger signed the budget bill, we learned that:
"Some things are worth fighting for, and a good budget is one of those things," he said, noting that the state’s deficit was $16 billion when he took office in 2003.
So, state spending increased by 40% since 2003, but the budget deficit fell by $2 Billion?

None of this is meant to defend Schwarzenegger’s decision to institute fees, but it sure looks to me like the problem is more structural than event driven. I think that’s what the Governator was alluding to here:
"What we have to do is fix the budget system. The system itself needs to be fixed, and I think that this is a good year, this coming year, to fix it," Schwarzenegger said in Long Beach, where he was promoting his plan for health care reform.

California is struggling with shrinking state tax revenue from the meltdown of the subprime housing market and the credit crunch on Wall Street.
Again, I don’t know that the problem is structural. Perhaps the $14 Billion shortfall has more to do with increased discretionary spending than anything else. From what I’ve been able to gather, however, the real problem is that California voters want their government goodies guaranteed, but don’t want higher taxes to pay for them.
Written By: MichaelW

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