COMMERCIAL EXPLOSIVES TAXES
NSSGA POSITION:
NSSGA opposes efforts to impose a user tax on the commercial explosives industry. Aggregates are essential to our nation’s economy and cannot be obtained without the use of explosives. As one of the largest users of explosives, the aggregates industry would be asked to pay a large portion of these taxes. This additional tax burden would fall hardest upon the 80 percent of NSSGA members that are small businesses and could cause layoffs and closings. Ultimately, an explosives user tax would be paid by the American people in higher construction costs. NSSGA believes it is unwise to fund law enforcement programs so important to safety and security of American citizens on fees that fluctuate with the economy and bear no relationship to the need for government oversight or intervention.
BACKGROUND:
Several Bush administration budgets included proposals to assess a fee on users of explosives that administration officials contended would generate $120 million. The revenue generated would be used to pay the salaries of Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) employees who regulate the explosives industry. As ATF costs rise, the $0.02/pound fee, while appearing small, would have an enormous impact. Under the proposals, the Attorney General would have authority to increase the fee rate as ATF costs rise. A $120 million tax would be a 12 percent increase to the assessed annual commercial value of explosives.
NSSGA and like-minded organizations met with the Office of Management & Budget (OMB) to explain concerns with the explosives fee proposal. Ultimately, the explosives fee was not included in the FY ’09 administration budget request.
TALKING POINTS:
- The production of aggregates in construction greatly depends upon the use of explosives. There are approximately 3,200 quarries in the U.S., nearly all of which extract materials through the judicious and responsible use of explosives. The aggregates industry is the second largest user of explosives next to the coal industry.
- NSSGA views this “user fee” as a tax on the use of explosives going to fund those regulating the industry. Ultimately the American public will pay for it in higher construction costs.
- The national infrastructure depends upon the use of explosives to extract aggregates. When the cost of explosives increases, the cost of quarried aggregates increases and, given that these products comprise the bulk of most building materials, the cost of construction increases. The cost of construction is born on the backs of all of our nation’s citizens who must pay higher prices for housing and for public buildings paid for by taxes.
- The ATF regulates a number of industries, but none of them has such a far-reaching impact as aggregates on the economy of our country. ATF needs to do a better job of explaining why commercial explosives were singled out for this user tax, on top of a 10-fold increase in licensing/permitting fees.
- Commercial explosives are not the preferred weapon of criminals or terrorists. Criminal use of explosives results in five or six deaths per year. Where terrorists have used explosives, they have been mostly self-manufactured from commonly available materials, not commercial products.
- NSSGA believes licensing and permitting for use of explosives are necessary for safety and security and should continue to be subject to congressional oversight.
Obtaining these credentials, however, should not be dependent on fee collection. - An explosives user tax is not fair or equitable. NSSGA opposes funding law enforcement programs critical to safety and security of American citizens on fees that will fluctuate with the economy and bear no relationship to the need for government oversight or intervention.
Updated: November 2008
