The good news: There are no per-flight user fees for general aviation in President Obama’s fiscal year 2016 budget. The bad news, according to officials with the National Business Aviation Association, is there is a renewed call for lengthening business aircraft depreciation schedules.
“The Obama administration in previous budget documents has repeatedly recommended user fees, but the administration appears to have pivoted away from this position by choosing not to use the budget to once again propose the fees,” said NBAA President and CEO Ed Bolen. “Clearly, this is progress on a key issue. The challenge is that, in his budget, the president still appears to be singling out general aviation, with a proposed change in aircraft depreciation schedules.”
Although there is no mention of user fees for aviation in this year’s White House budget proposal, calls for the fees, included in several White House budgets over the years, have been met with increasing opposition from elected officials and industry leaders.
For example, members of the U.S. Senate and House of Representatives have repeatedly written to the president to oppose user fees. Opposition to the fees has been voiced from the state level as well, NBAA officials note. In recent years, several governors, from both political parties, have written the president to tell him that user fees would do more harm than good. More than 100 mayors from across the country have likewise expressed opposition to user fees with the White House.
“With the release of this newest budget from the White House, it appears to us that the president is backing away from user-fee proposals, and that our efforts are making a difference,” Bolen continued. “That said, we know that we still have work to do on issues like the president’s proposal for changing the depreciation schedule.”
Specifically, the White House budget proposal, released Feb. 2, contains language, which states: “Airplanes not used in commercial or contract carrying of passengers or freight, such as corporate jets, generally are depreciated over five years. The administration proposes to increase the depreciation recovery period for general aviation airplanes that carry passengers to seven years.”
Bolen noted that Obama has often erroneously referred to the long-established tax policy – set by the IRS and approved by Congress decades ago, and fully adhered to by businesses today – as a “corporate jet tax loophole,” which The Washington Post, as well as other news organizations, members of Congress, labor leaders, small business champions and others have said is a misleading and inaccurate characterization of business aircraft depreciation schedules.
“The president has repeatedly misstated the facts about this business aircraft tax policy, and it doesn’t make sense to single out one industry, as he does in his latest budget, without the benefit of careful analysis of the impact his proposal would have,” Bolen said.
“The fact is, economists and others have long agreed that depreciation schedules that allow deductions to be taken closer to when a purchase is made incentivize many kinds of capital investments, including in aircraft. The current depreciation schedule does just that, which not only helps American businesses be more competitive, but also preserves jobs in America’s vital aircraft-manufacturing industry.
“We will not let the president’s decision to target business aviation – whether in this budget proposal, or any other venue – go unchallenged,” Bolen said.