WASHINGTON, D.C. — The U.S. House of Representatives recently approved an amendment to the highway bill offered by Representative Mike Pompeo of Kansas that requires the Government Accountability Office (GAO) to conduct a study of how tax revenues on JetA were diverted to the Highway Trust Fund.
Since 2005, federal excise taxes on the sale of non-commercial jet fuel to the general and business aviation fleets have been diverted into the Highway Trust Fund, depriving the Airport and Airways Trust Fund of much needed funding.
The so-called “fuel-fraud” provision was quietly enacted in response to a concern that the 2.5-cent per gallon difference between highway diesel and jet fuel tax rates would somehow encourage truckers to use jet fuel, officials with the National Air Transportation Association (NATA).
This ignored the fact that in 2005 the average price of diesel was $2.44 per gallon and Jet A $3.75 per galloon. Today, the average price of diesel is $2.86 per gallon and Jet A is $4.71 per gallon.
An archaic and overly bureaucratic refund mechanism and subsequent transfer to the aviation fund is available, yet seldom used by many in general aviation, NATA officials noted.
Notably, the IRS provides no mechanism for non-commercial general aviation end-users to apply for the refund. This means the Airport and Airways Trust Fund receives no revenue from the majority of general and business aviation jet fuel sales because non-commercial end users are not permitted to apply for the refund themselves.
“We urge the GAO to review the questions outlined in the Pompeo amendment and the underlying 2005 law and importantly, whether the significant cost disparity between jet and diesel fuel justifies the necessity of this provision,” NATA President Thomas Hendricks said. “We also hope GAO examines whether fuel additives and diesel engine design changes since 2005 also render the provision nothing more than a bureaucratic roadblock draining the Airport and Airway Trust Fund of revenues needed for airport improvements and the deployment of a modernized air traffic control system.”