White House proposes Aviation User Fees……..again
Like a weed that reappears every spring, aviation’s age-old foe has appeared again: a per-flight user fee proposal. The latest proposal comes from a White House who, let’s be honest, has not been the greatest friend to the aviation community.
President Obama is proposing a $100 fee for every flight departure. This would be in addition to the taxes and fees already levied on every flight in the US. In response to a petition opposing the proposed tax, the administration responded that “we want to ensure that everyone is paying their fair share … This is why the Administration proposed to establish a new surcharge for air traffic services.” AIN Online
This is an interesting mission statement, since it seems the entire aviation industry is unified against such a fee. So, it begs the question, who comprises this ambiguous “everyone” that the Administration is trying to be fair too?
In reality, this is an attempt to levy a targeted tax on an industry that is unpopular with the current administration. The listed exemptions make it clear that the current target is corporate aviation. The example cited by the Office of Management and Budget argues that an airliner and a corporate jet that fly from New York to San Francisco pay substantially different taxes for the services they provide. As flawed as this analogy is (and according to AOPA’s Sarah Brown so is the math), it confirms the Administration’s purpose: to assail corporate aviation.
Even though the proposal exempts certain segments of the industry (recreational piston aircraft, air ambulances, and aircraft operating outside of controlled airspace, to name a few), there is no guarantee that the fees wouldn’t encroach on these operations in the future. Even the smallest sectors of the aviation community should be, and are concerned. As Ed Bolen, President of the NBAA noted, once the camel’s nose is under the tent, the whole camel may soon follow.
It is worth noting that the proposed tax would have immediate and far-reaching effects, well beyond the scope contemplated by the White House. By way of example, an industry that is near and dear to me, aerial applicators, would be hit hard. (I am the current general counsel for the Colorado Agricultural Aviation Association.) The proposed user fee would be levied on a large percentage of these operator’s flights. They operate primarily outside of the air traffic control system, often taking off and landing on their own private airstrips. However, since they are often in “controlled airspace”, each flight would now cost them, and the farmer’s they work for, an extra $100. Does this seem like their fair share?
The Federal Excise Tax (“FET”) is the primary mechanism used to tax the aviation industry. For non-commercial flights 19.4 cents is added to the cost of each gallon of aviation gas, and 21.9 cents for each gallon of jet fuel. Commercial flights pay less per gallon, 4.4 cents. However, these commercial flights are taxed an additional 7.5% of the total flight cost, plus a per-flight charge of $3.80, up from $3.60 from 2011. These taxes are incurred on every flight, whether or not they use public airports or air traffic services.
The Airport and Airway Trust Fund (“AATF”), funded by the FET, had a cash balance of $9.4 billion in 2011. The FAA derives most of its budget from the AATF. FAA’s AATF page The system is well funded. The industry stakeholders aren’t crying out because of these perceived inequities in the current system. So, if there is a surplus as a result of the current taxing scheme, and the industry isn’t asking for help, why does the Administration seek to levy more tax on an already injured industry?
Let’s get the right treatment for that nagging spring weed and leave aviation user fees where they belong, dead in the ground.