By John Hughes
April 25, 2008
(Bloomberg) — U.S. business-jet owners would pay 65 percent more in fuel taxes to finance federal air-traffic control upgrades, under an agreement among Senate leaders.
The levy would increase to 36 cents a gallon from 21.8 cents now, under the accord announced in a statement today in Washington by Senator Jay Rockefeller, a West Virginia Democrat. Airline passenger fees and taxes wouldn’t rise, he said.
The agreement between Rockefeller, chairman of the Senate aviation subcommittee, and Montana Democrat Max Baucus, who runs the Senate Finance Committee, ends a seven-month standoff that stalled an aviation-funding bill. Today’s deal clears the way for an April 28 vote to bring the bill to the full Senate.
Rockefeller wanted to double fuel taxes for corporate aircraft while cutting fees for airlines, which he said paid disproportionately for aviation services. Instead, he settled for the smaller boost, so that small-jet owners will pay 5 percent of federal aviation costs, up from 3 percent.
“This agreement is a good down payment toward ending the growing inequities that exist between airline passengers and corporate jet users,’ Rockefeller said in the statement.
The House approved its version of the funding legislation, which would finance the Federal Aviation Administration through 2011, on Sept. 20.
The House bill, which would boost business jet-fuel taxes to 35.9 cents a gallon, and the final Senate proposal would need to be reconciled in a conference committee before being sent to President George W. Bush for his signature.
Bush Veto Threat
The Bush administration threatened in June to veto the House legislation, saying it doesn’t meet needs such as creating user fees to pass on even higher charges to business-jet operators. U.S. airlines backed the Bush position on user fees.
Today’s Senate agreement means that the user fees, which business-jet owners viewed as more burdensome than higher fuel taxes, are in neither version of the legislation.
The National Business Aviation Association, a Washington- based trade group for business-jet operators, said its members support funding the FAA and improving air-traffic control technology “with a reasonable fuel tax.’
“We applaud the continuing work Congress has done on this very important issue,’ Ed Bolen, the association’s chief executive officer, said in a statement.
An airline trade group called the tax increase for business-jet users “a step in the right direction.’
“It still falls short of the costs they impose on the system,’ James May, president of the Washington-based Air Transport Association, said in an e-mailed statement. “We will remain engaged with these committees as the remainder of the package is developed.’
While losing the battle for user fees, airlines gained other benefits in the Senate legislation, which doesn’t increase their costs. The House version raises airline passenger ticket charges for airport improvements to as much as $7 from $4.50, which would generate $1.1 billion a year.
The Senate bill also creates a new $400 million FAA account dedicated to upgrading the air-traffic control system. Raising the excise tax on fuel used by private jet owners will bring in an additional $240 million a year.
To contact the reporter on this story: John Hughes in Washington at email@example.com