- The American Association of Port Authorities wrote a letter to the Senate Finance Committee last week, protesting the proposed elimination of tax exempt private activity bonds (PABs), citing their value in infrastructure funding.
- The AAPA notes the importance of PABs as traditional means of tax exempt financing for surface transportation projects, airports, port facilities, water and wastewater facilities, multi-family housing projects and certain other exempt facility bond projects, as well as bonds for schools, universities, and hospitals.
- The letter also describes the increase in PAB value from $12.98 billion in 2015 to $20.38 billion in 2017. Further, the value of PABs in the Trump Administration's infrastructure plan is mentioned, along with the increased challenge to rebuilding success should the PABs be eliminated.
Tax reform is the top priority in the Trump administration right now, but the AAPA's recent letter shows some clauses in the reform may undermine other parts of the President's agenda, such as infrastructure.
The need for infrastructure repairs grows greater everyday. Reports show valuable sectors including the chemical industry, freight transportation and ports are desperately in need of infrastructure upgrades or outright rebuilds. Such investments, however, often require public funding — a monetary stream the AAPA believes is being targeted through tax reform.
"There’s a troubling provision in both the House and Senate tax bills that would eliminate the tax exemption for advance refunding of bonds, which could impact the beneficial savings of these bonds," Aaron Ellis, AAPA's public affairs director, told Supply Chain Dive. "AAPA opposes this change."
"Both the House and Senate bills would eliminate the alternative minimum tax, which allows PABs to be offered at a lower tax rate, but this is only of use if PABs remain tax-free like in the Senate bill," Ellis explained. In addition, AAPA is also "advocating for maintaining wind energy tax credits" and said it would weigh in on a provision taxing foreign-owned cruise lines later this week.
Tax reform was once treated as a bit of a given under an administration with Republican majorities in both chambers of Congress, but industry opposition to particular clauses show getting such a package approved will continue be a hotly contested process, with few guarantees.