an effort to close the state’s budget deficit, Gov. Dannel P. Malloy has
recommended eliminating some of the state’s tax exemptions while also imposing
new taxes. But both Tom Foley – who owns an aviation company – and a
representative of a national aviation group said Friday that the impact of two
such proposals aimed at aircraft owners would be “nothing short of
catastrophic” for the industry.
bill would remove a sales tax exemption on repairs and services to aircraft,
and the other would add an annual registration fee to planes stored in the
Mark Kimberling of the Aircraft Owners and Pilots Association said that the
measures proposed less than a month ago already have some aircraft owners and
businesses making plans to park their planes outside the state.
obvious reasons, aviation is a highly mobile industry, Kimberling said. If
passed, the new measures would leave Connecticut in a less-than-competitive
position. According to testimony submitted by several aviation groups the state
already has the highest aircraft registration fee in southern New England and
the additional tax will make it less competitive than other states in the
these aircraft are going to migrate and with them is going to go the revenue
they’re collecting now – the revenue they’re collecting on fuel tax and the
revenue they’re collecting on corporate tax income, because there’s lots of
high paying jobs in this sector,” he said.
said he understands the governor’s position and knows that many industries have
been asking him to rethink some of his new tax proposals. But in the case of
aviation, he said, it comes down to an industry that can easily pack up and leave.
In this case the flexibility is such that while the legislation may have been
designed to raise revenue, Kimberling said it would almost certainly have the
they may not have to go far. Kimberling used a Cessna Caravan as an example to
demonstrate how Connecticut’s tax rates would stack up against nearby states in
terms of aircraft fees.
it stands now, a Cessna Caravan owner pays $1,500 to base the aircraft in
Connecticut, he said. Under the new proposal that owner would pay an additional
$11,130, he said. That’s a total of $12,630 per year just to base it here.
New York, Kimberling said, there are no such fees – neither for registration or
personal property tax.
done intentionally because they want to attract aircraft because they realize
all the associated economic activity, jobs, and revenue collected in other
areas,” he said.
and Rhode Island both impose low annual aircraft registration fees of $175 and
$160 respectively, he said. Those fees are not enough to deter aircraft owners
from a state, but $12,630 certainly is, he said.
said the two proposals combined represent the largest and most extreme attempts
to raise costs for the aviation industry that he has ever seen.
he also said he has been in contact with the governor, who seemed at least
receptive to listening to his case. He also seemed to want to learn more about
the impact of the bills, he said.
didn’t want to say that he admitted there’s a possibility he made a mistake,
but he kind of insinuated that the nature of this is you don’t always see the
full picture when you put forth a proposal, even when you have the best of
intentions. In his case he’s doing the best he can to patch a budget
shortfall,” he said.
Barnes, Malloy’s budget director, said Sunday that his office is indeed looking
into what the potential impact of the two measures would be with an eye toward
altering them if they would cause a mass aviation exodus from the state.
in fact it does create such a dramatic incentive to leave, and we thought they
would, then we would reconsider that,” Barnes said.
he also said at this point in the budget debate he’s taking rhetoric about
industry-decimating taxes with a grain of salt.
fact that the people who would be subject to the tax are upset by it is frankly
to be expected for me,” Barnes said. “At this point that’s been the case with
all the taxes being proposed.”
appeals have come from the trucking, boating, and auto sales industries as well
as yoga studios and any number of other industries taking a hit in the proposed
budget, Barnes said.
some of the concerns he’s heard from Kimberling and others in the aviation
industry haven’t been all that convincing, he said, adding the question: What
is the point of owning your own aircraft and storing it out of state?
the whole purpose of having a plane so you can travel more quickly? If you have
to drive three hours to get to your plane, what’s the point?” he said.
said that even now Connecticut doesn’t have a tax advantage over surrounding
states in regard to aviation, something he credits to effective advocacy.
industry really has undertaken a long-term effort to have their business not be
subject to sales tax. That’s a business advocacy success, I’m sure,” he said.
because the industry has been so successful in securing a favorable tax climate
in the Northeast, it’s easy to argue that when one state has a less favorable
policy aircraft owners will leave for a neighboring state, he said.
applauded their successful advocacy strategy but said he’s not sure this state
has the luxury of maintaining that right now.
Foley, the former Republican gubernatorial candidate who also is owner of
Stevens Aviation, said that eliminating the sales tax exemption on repairs may
have a bigger impact on Connecticut jobs than the Malloy administration
mobile equipment like aircraft, it doesn’t make sense to put a sales tax on
repairs because people simply won’t have their repairs done here in
Connecticut,” he said.
said the businesses themselves would probably end up relocating to states where
the exemptions exist and they would take the jobs with them.
who says that that’s not going to affect the amount of maintenance that’s done
here, and affect Connecticut jobs, doesn’t know what they’re talking about,” he
said he’d like to see the two provisions affecting aircraft be killed sooner
rather than later.
is such a large amount of money that we’ve already got aircraft owners and
business making plans to go to other states. My concern is not just to get this
resolved but to get it resolved quickly because just having it out there could
possibly damage the industry,” he said.
bills will be discussed at a Finance, Revenue, and Bonding Committee public hearing
Monday at 10:30 a.m. in the Legislative Office Building, Room 2E.