Airlines’ Plan Would Cut Taxes on Their Most Lucrative Routes
Tuesday, July 24, 2007
Washington, DC – The Alliance for Aviation Across America today denounced the latest commercial airline tax cut scheme, introduced last week in the Senate Finance Committee’s Subcommittee on Energy, Natural Resources and Infrastructure hearing by a representative of one of the major commercial airlines. The proposal, which was presented on behalf of the Air Transport Association, would radically overhaul the current funding structure in favor of a new ticket tax formula that would provide a huge tax break for the airlines. Significantly, there is an exception built into the proposal for flights of less than 250 miles, which appears to include some of their most profitable and congested routes. The airlines introduced their proposal as Congress is considering reauthorization of the Federal Aviation Administration.
“The airlines have waited until Congress has fewer than 30 legislative days remaining before FAA reauthorization expires to offer their proposal, and it turns out their plan is just one more thinly veiled attempt to get a huge tax break at the expense of small businesses and communities,” stated Selena Shilad, Executive Director of the Alliance for Aviation Across America.
The industry-authored legislation would give the airlines a tax break on their most lucrative routes by exempting the first 250 miles of any flight from certain taxes, including flights between Washington, DC and New York City or Philadelphia; New York City and Boston; Dallas and Houston; and other highly traveled routes. In fact, 25% of the top 12 busiest routes in the country would be tax exempt under the airlines’ proposal, creating a significant loss of revenue for air traffic modernization. For example, on flights between New York, NY and Boston, MA, airlines could avoid paying as much as $10.5 million in taxes per year on this route alone.
To make matters worse, the Chief Operating Officer of Delta Airlines, who presented this plan on behalf of ATA, attempted to justify this exemption by saying it would help and small communities. He specifically stated that this “adjustment exempts the first 250 miles of any flight, which lessens the overall cost burden that passengers from small communities would have to bear.” Not only is it clear that no one but the airlines would benefit from this exemption, but as the Government Accountability Office (GAO) has testified to Congress, when the airlines receive a tax break, savings are never passed onto airline customers. In fact, as the last two GAO studies have concluded, when the commercial airlines have received tax breaks in the past, the airlines have kept their fares the same or raised them.
“The notion that this proposal is intended to help small or rural communities is, at best, laughable,” continued Shilad, “The airlines’ proposal for a 250 mile tax exempt zone has nothing to do with Helena, Montana or Sioux City, Iowa, and everything to do with cashing in even more on their most lucrative routes.”
The Senate Finance Committee is expected to introduce its own proposal for FAA reauthorization in the coming months. The Alliance and leading general aviation groups have supported HR 2881, which was recently passed out of the House Transportation and Infrastructure Committee, and represents a common sense approach to FAA reauthorization that would dramatically increase modernization funding, while retaining the current, simple, easy to use excise tax system. By contrast, S.1300, which was recently introduced in the Senate, would overhaul the current funding system for FAA in favor of a new “user fee” tax on small businesses and towns across the country that rely on small planes. In addition, the Senate Commerce Committee recommended elimination of the $.043 per gallon fuel tax the big airlines currently pay, while general aviation would be faced with a more than doubling of the fuel tax – meaning that the commercial airlines would net out with a huge tax giveaway that is directly shouldered by general aviation.
The Alliance for Aviation Across America (AAAA) recently reached over 3,300 members, including aviation professionals, local airports, rural and agriculture groups, city, county and state officials, and small and mid-size businesses dedicated to protecting small and rural communities by fighting against any overhaul of the current, fuel tax system in favor of new taxes and fees. Members of the Alliance for Aviation Across America include: the Aircraft Owners and Pilots Association, whose membership is comprised of 412,000 members nationwide, the National Business Aviation Association, whose membership includes 8,000 members, the National Farmers Union, the League of Rural Voters, the National Association of State Aviation Officials, the National Grange, the Small Business and Entrepreneurship Council, the American Corn Growers Association, the Independent Cattlemen of Texas, the Texas Farm Bureau, Air Care Alliance, the National Agricultural Aviation Association, Helicopter Association International, and over 1,200 small and medium-size businesses, charitable organizations, and groups and associations from across the nation.
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