Educating legislators on the benefits of general aviation and the effects of well-intentioned, but ill-advised tax proposals that would have hurt the aviation industry and state economies was a big part of advocacy efforts by the Aircraft Owners and Pilots Association in 2011. States introduced tax proposals targeting general aviation as a way to fix budget shortfalls that reached an estimated $41 billion in fiscal year 2011, AOPA officials note.
State tax proposals can put pilots, mechanics, and other industry workers out of work and still not help a state’s bottom line, said AOPA Director of State Government Affairs Mark Kimberling.
“These tax proposals are most often conceived in a vacuum based on misperceptions about GA, without careful examination of all the economic factors,” he said. “Legislators are looking for an immediate source of revenue, and GA aircraft are often viewed as the proverbial low-hanging fruit to get it.”
Aircraft owners currently face nine different types of state taxes: excise, fuel sales, aircraft sales, registration, aircraft personal property, aircraft parts sales, aircraft use, maintenance labor sales and fuel excise taxes. In Washington state and Connecticut, proposals to add more taxes would have devastated GA in these states, forced businesses and aircraft to nearby states and left the states in worse economic condition in terms of jobs and revenue, he said.
AOPA and Washington state members defeated a proposal during the past two legislative sessions that would have taxed 0.5% of an aircraft’s taxable value “for the privilege of using any aircraft in the state.” In Connecticut, AOPA, local business owners and the Connecticut Business Aviation Group rallied together to convince Gov. Dannel P. Malloy to drop a proposed personal property tax from the state’s two-year budget package. AOPA also worked to keep aircraft exempt from the Massachusetts 6.25% sales tax, and is currently advocating for a bill in Pennsylvania that would exempt aircraft sales, parts, and labor from a 6% tax.
A Michigan proposal to increase the excise tax on aviation fuel from a flat fee of 3 cents per gallon to a percentage-based rate of the wholesale price of fuel was debated over the last few years. The justification was based on the fact that the excise tax had not been increased in many years. But the state also imposes a 6% sales tax on fuel, which — combined with the excise tax — already amounts to one of the highest cumulative state fuel tax rates in the nation. After working through the issue with the legislature, not only has the proposal to increase the tax rate been dropped, there is now legislation pending, introduced by state Rep. Dave Agema, that would reinvest a portion of the existing sales tax in aviation.
“Our message to state legislators is clear. We are willing to pay our share of taxes, but we want to ensure that the taxes are measured and will actually benefit the state — and, specifically, the aviation system,” Kimberling said. “Everybody loses when poor tax policy passes. We’re also going to continue our education campaign. The more decision makers understand general aviation, the less they view us as a mere revenue target. And, often, they come around to see us as the economic asset we are to their states.”
For more information: AOPA.org