MONTGOMERY, Ala. – The House Ways and Means Education Committee passed a bill last week that could significantly increase shipping activity throughout Alabama, particularly at the Port of Mobile.
The bill, sponsored by Rep. Chip Brown, R-Hollingers Island, would modify existing tax incentives for companies who ship goods out of Alabama’s ports, incentives that lawmakers say are currently being severely underutilized.
According to the Alabama Department of Revenue, less than ten companies used the state’s port tax credits in 2021. Despite the incentives having an annual cap of $12 million, the less than 10 companies in 2021 only claimed a collective $573,121 in port tax credits.
The reason for the port tax credit underutilization, lawmakers say, is that nearby states offer more competitive tax credits, with most vehicles manufactured in Alabama being transported overseas being shipped out of ports in South Carolina or Georgia.
“Our port is growing, we’ve got the fastest growing port in the country,” Brown said when presenting his bill to the committee.
“On coal, (we’re) going from a net importer to an exporter, but we’re currently not shipping any of the vehicles through the port of Mobile, they’re all going through Savannah and Charleston. So what this will do hopefully is incentivize our automobile manufacturers and others to actually start utilizing our ports more.”
Under Brown’s bill, port tax credits would increase for companies the more their cargo volume increases, a proposal that has been named as a major priority for House Speaker Nathaniel Ledbetter, R-Rainsville.
Were a company to ship 5% more volume in a 12-month period compared to the previous 12-month period, they could claim a $50 tax credit for every twenty-foot equivalent container unit, a commonly used shipping measurement referring to the most common type of cargo ship container. At the highest rate, companies could claim up to $125 per TEU were they to ship 25% more than the previous year.
The bill saw one amendment during the committee meeting. The bill originally increased the incentive cap to $20 million, however, Brown argued that since the incentives were hardly being utilized as they were, the cap should be lowered to the original $12 million.
The amendment passed without opposition.
Rep. Troy Stubbs, R-Wetumpka, asked Brown if the incentives in the bill were specifically requested by shipping companies, and if companies had committed to use Alabama ports more frequently were the bill to become law.
“It’s all about the bottom line, and this puts us more in line with what they’re doing in neighboring states and makes it more enticing to ship through Alabama for Alabamian-manufactured goods,” Brown said.
“And from an economic development standpoint, this is a way to bring companies into the state that may choose another state to go to because they’re more attractive from an economic standpoint. So this is something that industry in our state is wanting; it’s something that we have in place, we just have to tweak it and that’s what this bill does.”
The bill saw unanimous approval in the committee, with the committee’s chair, Rep. Danny Garrett, R-Trussville, telling Alabama Daily News that the bill could be the key for the state’s ports to reach their full potential.
“I think that the ports, not only the Port of Mobile, but the ports in the state are very important and they’re not being utilized like they could be,” Garrett said.
“Part of that reason is because other states have incentives that are causing people to utilize those ports. In Alabama, we had an incentive, but it wasn’t very competitive, so what this would do is hopefully encourage other people to use the Alabama ports.”
Rep. Anthony Daniels, D-Huntsville, who also sits on the committee, noted that beyond the increased shipping activity out of Alabama ports that the bill could create, the incentives could also attract more auto manufacturing, tech and agricultural business to the state.
“I think (this bill) will help us move products in and out of Alabama a lot easier, and I think it will also in the long term attract larger industry,” Daniels told Alabama Daily News. “So I think that it helps us in the long run in building this infrastructure now and puts Alabama in a position to be competitive long term.”