The Arkansas legislature recently passed a sales and use-tax exemption for aircraft maintenance, as well as a flyaway exemption for aircraft sales.
The bill, which was signed into law by Gov. Asa Hutchinson, was sponsored by Rep. Joe Jett, a pilot and the co-chair of the Aviation Caucus in the state’s General Assembly.
“There’s an aerospace industry here in Arkansas that is first-class, but needs to be promoted beyond the state,” said Jett. “We’ve got to do anything we can to make Arkansas more friendly to business aviation.”
While Arkansas is home to several nationally known manufacturing and service facilities for business aircraft, such as Rose Aircraft Services and Dassault Falcon Jet’s completion center in Little Rock, the existence of the state’s sales and use tax resulted in some business going to neighboring states, officials noted. Kansas and Tennessee have flyaway exemptions and, until recently, many buyers of aircraft refurbished or completed in Arkansas would take delivery in those states.
“Those airplanes never were based in Arkansas and they never will be based in Arkansas, so we shouldn’t be collecting sales tax on them,” said Jett. “It was a hardship because a lot operators were afraid to bring their airplanes here to do a pre-buy inspection or refurbishment.”
With 45 repair stations and 80 FBOs in the state, general aviation supports 5,400 jobs in Arkansas. From discussions with industry leaders, Jett learned that the lack of clarity on sales and use tax – parts were exempt but labor was not – was hampering the growth of the aviation maintenance industry in the state. Jett’s bill makes explicit that maintenance on aircraft over 12,500 pounds is also tax exempt.
“This bill helps companies in Arkansas that maintain and service business aircraft,” said Steve Hadley, regional representative for the Southwest for the National Business Aviation Association. “Passing this bill shows how Arkansas recognizes the importance of aviation to its citizens in terms of jobs and economic activity.”