Windsor Star

why duty free gas is at the heart of the bridge fight.

- DAW­SON BELL AND JOHN GAL­LAGHER

DETROIT The po­ten­tial loss of mil­lions of dol­lars in toll rev­enue ex­plains much of the Am­bas­sador Bridge Co.’s op­po­si­tion to the con­struc­tion of what would be a com­pet­ing, pub­licly owned Detroit River cross­ing.

But to un­der­stand the te­nac­ity with which the fight has been waged, and the lengths to which the bridge com­pany has gone to defy the state over the de­sign of its Gateway Plaza in Detroit, you must look at more than traf­fic over the span.

You have to con­sider what’s un­der­ground.

Be­neath the plaza are thou­sands of gal­lons of gaso­line and diesel fuel that are sold tax-free and at huge profit by the bridge com­pany’s Ammex Detroit Duty Free Store.

Bridge owner Manuel (Matty) Moroun fought along mul­ti­ple fronts for more than a decade be­fore win­ning the right to sell duty-free fuel, fi­nally tri­umph­ing in court in 2007.

By sell­ing gaso­line and diesel fuel at slightly be­low mar­ket prices, the Ammex fuel op­er­a­tion can net, based on prices last week, a sav­ings of more than 60 cents per gal­lon (about US$9 for a 15-gal­lon fill-up) that nearby U.S. sta­tions pay in gas and sales taxes.

“That goes di­rectly into (Moroun’s) pocket,” said Bill Vol­len­wei­der, pres­i­dent of the Detroit Travel Cen­ter truck stop on I-75 just south of Detroit. “It’s a heck­uva com­pet­i­tive dis­ad­van­tage. He won the right to do it. But it’s not right.”

Moroun’s son, Matthew, said the gas sales pro­duce healthy prof­its but “nowhere near 60 cents” a gal­lon.

How Am­bas­sador Bridge won, pro­tects its right to fuel sales.

The own­ers of the Am­bas­sador Bridge won’t say how much money they make sell­ing taxfree gaso­line to Canada-bound truck­ers and trav­ellers.

“There’s more than a mil­lion dol­lars in­volved. It’s not un­fair to say that,” Matthew Moroun, son of bridge com­pany owner Manuel (Matty) Moroun, told the Detroit Free Press on Fri­day. Prob­a­bly a lot more. Gaso­line and diesel fuel sold at the sprawl­ing plaza on the Detroit side of the bridge typ­i­cally are priced only a few pen­nies a gal­lon lower (US$3.84/ gal­lon for un­leaded Thurs­day) than at nearby non-duty-free sta­tions and truck stops. That means about 60 cents a gal­lon of what would be state and fed­eral taxes any­where else goes straight to the bot­tom line for the bridge own­ers.

It would be dif­fi­cult to con­test that the Ammex Detroit Duty Free Store is the most prof­itable fuel re­tailer in Michi­gan.

Maybe in the coun­try. The Free Press could iden­tify only one other duty-free gas sta­tion on the U.S.-Canada bor­der — at a rel­a­tively re­mote cross­ing at In­ter­na­tional Falls, Minn.

Doc­u­ments filed in one of the many law­suits over Matty Moroun’s right to sell duty-free fuel show that the state taxes alone (about two-thirds of all fuel taxes) on Ammex sales would have been about US$2.4 mil­lion.

Com­bined with fed­eral match­ing money, that would have brought the state about $7.5 mil­lion in fund­ing for state high­way con­struc­tion.

If it could have been col­lected.

Crit­ics of the bridge com­pany — and in the midst of the battle over con­struc­tion of a new in­ter­na­tional river cross­ing, they are le­gion — de­scribe Moroun’s gas sta­tion prof­its as ex­ces­sive.

“This is what hap­pens when you give one op­er­a­tor a mo­nop­oly,” said Tom Shields, a Lans­ing-based con­sul­tant with the coali­tion pro­mot­ing a pub­licly owned al­ter­na­tive to the Am­bas­sador Bridge. “Charg­ing the cus­tomers a vir­tual tax and putting the money in your pocket is all about greed.

“It’s no won­der they vi­o­lated their agree­ment with the ... gov­ern­ment and built their plaza to make sure ev­ery car and truck drives through their gas sta­tion.

They are mak­ing mil­lions ... at the ex­pense of Michi­gan tax­pay­ers who are los­ing state and fed­eral tax dol­lars to re­pair our roads.”

Matthew Moroun said Ammex prof­its are ex­ag­ger­ated, and the bridge com­pany’s po­si­tion in the mar­ket­place dis­torted.

Matthew Moroun said the gas sta­tion doesn’t com­pete un­fairly with re­tail­ers who col­lect taxes be­cause “our mar­ket is lim­ited. Any­one can stop at the gaso­line sta­tion at Fort and Clark. The only peo­ple that can come to our duty-free op­er­a­tion are those that have cho­sen to drive across the bor­der and go to Canada.”

He also likened tax-free fuel sales at the bridge to sim­i­larly tax-free sales of avi­a­tion fuel to air­lines fly­ing across the U.S. bor­der.

Michi­gan tax and high­way authoritie­s beg to dif­fer. The ben­e­fits of tax-free avi­a­tion fuel flow largely to con­sumers in the form of lower prices, they said; the ben­e­fits from the duty-free Ammex sta­tion flow al­most ex­clu­sively to the bridge com­pany.

The state Depart­ment of Trea­sury de­clined to com­ment at length about the Moroun gas sta­tion, is­su­ing a one-sen­tence state­ment that “the depart­ment’s plead­ing in court re­flect its po­si­tion that all mo­tor fuel sold in Michi­gan should be sub­ject to Michi­gan tax.”

Both the state and U. S. Cus­toms op­posed the unique treat­ment of the Ammex sta­tion, which came af­ter more than a decade of ag­gres­sive lit­i­ga­tion by the bridge com- pany and its af­fil­i­ates in state and fed­eral courts.

Moroun lost many of the bat­tles, but fi­nally got the U.S. Court of In­ter­na­tional Trade to af­firm the sta­tion’s sta­tus as part of a bonded duty-free ware­house. That rul­ing led to Michi­gan courts in 2007 deny­ing the state’s right to im­pose fuel or sales taxes.

The bridge com­pany ar­gues that gas and diesel fuel are iden­ti­cal to other goods sold duty-free, such as to­bacco and cig­a­rettes, and should en­joy the same favourable tax treat­ment be­cause they in­crease com­merce in the coun­try in which the trans­ac­tion takes place but are con­sumed else­where.

The prob­lem with that the­ory, Shields said, is that cus­toms of­fi­cials im­pose strict lim­its on other duty-free goods (for ex­am­ple, one bot­tle of liquor and one car­ton of cig­a­rettes al­lowed into Canada from the U.S.), but fuel sales are lim­ited only by the size of the ve­hi­cle’s tank.

In ad­di­tion, Shields said, much of the Detroit-Wind­sor traf­fic comes from those who reg­u­larly cross the bor­der and burn plenty of their fuel on Michi­gan high­ways.

Shields said he be­lieves much of the in­tran­si­gence the bridge own­ers have shown in their dis­pute with state trans­porta­tion of­fi­cials over the de­sign of the ramps and plaza on the U.S. side stems from their de­sire to di­rect traf­fic to the gas pumps.

MDOT spokesman Bill Shreck said build­ing the en­try­way ac­cord­ing to the de­sign he said was orig­i­nally agreed to likely would re­sult in re­duced traf­fic vol­ume at the Ammex sta­tion and store. Shreck said, how­ever, that the depart­ment’s only ob­jec­tive is “to fa­cil­i­tate the move­ment of traf­fic through the cross­ing.”

“We can’t spec­u­late” about why the bridge com­pany has de­fended its pre­ferred de­sign so fiercely ( to the point of bridge com­pany Pres­i­dent Dan Stam­per spend­ing a few hours in jail for con­tempt of court last year), Shreck said. “We don’t know what the mo­tives are.”

In the early years of the dis­pute over whether du­tyfree sales at the Am­bas­sador Bridge could in­clude fuel, Bill Vol­len­wei­der, owner of the Detroi­ter Travel Cen­ter on I-75 in Wood­haven, or­ga­nized a group of truck stop own­ers to seek con­gres­sional ac­tion to block what they viewed as un­fair competitio­n.

As the tax authoritie­s did, they won a few skir­mishes, get­ting lan­guage in­serted in an en­ergy bill.

But Matty Moroun won the war when the leg­is­la­tion it­self died.

To­day, Vol­len­wei­der de­scribes him­self as “very, very un­happy” about be­ing on the wrong side of the Am­bas­sador Bridge truck plaza’s com­pet­i­tive edge.

But “it’s the old story,” he said. “When you can’t do any­thing about it, you learn to live with it.”

 ??  ??
 ?? Wind­sor Star files ?? Duty free gas pumps at the Am­bas­sador Bridge are the source of much profit for the Am­bas­sador Bridge Com­pany, say ob­servers.
Wind­sor Star files Duty free gas pumps at the Am­bas­sador Bridge are the source of much profit for the Am­bas­sador Bridge Com­pany, say ob­servers.
 ??  ?? Matty Moroun
Matty Moroun
 ??  ?? Matthew Moroun
Matthew Moroun

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