The Virginia legislature recently passed a measure to exempt aircraft parts and maintenance from sales and use tax.
The bill, HB 1738, was recently passed by the state Senate, following its earlier passage by the House with overwhelming support. The legislation now goes to Gov. Terry McAuliffe for his signature.
In welcoming the bill’s passage, officials with the National Business Aviation Association (NBAA) noted that it promises to accelerate growth in the commonwealth’s aircraft maintenance, repair and overhaul (MRO) industry.
“Virginia is home to a lot of business aircraft, but has no major MRO facilities,” said Greg Voos, NBAA’s Southeast regional representative. “Many operators go out of the state for maintenance, and, as a result, the commonwealth is losing millions of dollars in economic activity every year. This exemption is the first step to make Virginia more attractive for repair shops to set up and expand.”
Voos traveled to Richmond many times over the last several months, working in a coalition with AOPA, VABA and other local groups to advocate for the exemption. Several NBAA member companies testified before the General Assembly on the need for a maintenance tax exemption.
NBAA, which has nearly 300 member companies in Virginia, conducted an online survey of those companies, which underscores the need for the new tax policy. In the survey, most companies indicated they currently travel out of Virginia for major maintenance work, spending $50,000 to $100,000 per event, but would consider having the work done in Virginia if a qualified MRO was available.
The bill’s chief patron was Richard Anderson in the House. Anderson recently formed the Virginia General Assembly Aviation Caucus, along with Daniel Marshall, who also authored Virginia’s aviation week resolution, and Barry Knight, the only active pilot in the General Assembly.
The Virginia tax exemption includes parts and maintenance for unmanned aircraft systems, a specialty that lawmakers and industry representatives both want to grow in the commonwealth.
McAuliffe has until March 27 to sign the bill into law. As written, the tax exemption takes effect in 2018 and sunsets in 2022, but NBAA officials said they will be working with local groups to make it permanent.
“When NBAA works with local groups to push for tax reform, it can sometimes take many years to accomplish,” said Scott O’Brien, NBAA’s senior manager of finance and tax policy. “Based on the strength of the coalition in Virginia, the industry was able to secure passage in one legislative session, which is an outstanding accomplishment.”