WASHINGTON – The nation’s six shipbuilders could see a change in how they pay their taxes if Sen. Olympia Snowe is successful in getting legislation she introduced this week passed in this session of Congress.

Her bill would change the tax code to allow shipbuilders to pay income taxes only when they deliver the final product to the government.

Under current law, shipbuilders such as Bath Iron Works are required to pay income taxes based on estimates of profits during construction of a ship. The average time for construction of a naval ship can be between three years and seven years.

“My legislation would not reduce the amount of taxes ultimately paid by a shipbuilder,” Snowe said. “It simply would defer payment until the profit is actually known – when the ship is delivered.”

Paying hefty tax bills is challenging for shipbuilders because the Navy often does not pay them until a year after the product is completed and delivered. Commercial shipbuilders already pay taxes based on their realized profits.

“With the decline in the defense budget, we don’t have volume in our yards, so it’s essential that we are able to manage revenue,” said Cynthia L. Brown, president of The American Shipbuilding Association, a Washington-based lobbying organization.

The association is in the process of studying the amount of taxes collected annually by shipbuilders.

Brown said she thinks the legislation has more momentum for passage this year than last year because of Snowe’s position on the Senate Finance Committee and support from Senate Majority Leader Trent Lott of Mississippi.

“Last year nothing really happened because nothing happened on tax bills except for the marriage penalty and the estate tax,” Brown said.