With its reputation as a pro-growth, low-tax state, Texas should be a favorable place to work on aircraft. But it’s one of a shrinking minority of states that tax repair parts for general aviation aircraft.
The 6.25% sales tax on parts drives significant repair and maintenance business to out-of-state facilities, resulting in a loss of economic activity – and tax revenue – that the Texas Legislative General Aviation Caucus is hoping to reverse, according to officials with the National Business Aviation Association (NBAA).
“Texas is home to over 25,000 GA aircraft, and it’s estimated the state loses about three to five times what is currently remitted in sales tax because of the tax policy disparity in contrast to the 30 to 40 other states that offer the exemption,” said state Rep. Dwayne Bohac, a member of the caucus and author of a bill to exempt repair parts from Texas sales tax. “This legislation will encourage suppliers, manufacturers and other small businesses that serve the general aviation industry to remain and expand in Texas.”
Bohac introduced the tax exemption bill last legislative session and it passed the House with little opposition, but was not taken up by the state Senate before the end of the legislative calendar.
During this legislative cycle, NBAA, the Aircraft Owners and Pilots Association, Texans for General Aviation, Partnership for Corporate Aviation Training, McCreery Aviation, Texas Association of Manufacturers and several other groups are pushing for the bill to pass.
“This bill can bring a lot of new business into Texas, and it can help business here be more efficient,” said Steve Hadley, NBAA’s Southwest regional representative. “It will bring jobs and activity to the state. This bill would make Texas more competitive with other states, and more attractive to aviation businesses anxious to bring facilities and jobs to Texas but deterred by the tax.”
The aerospace and aviation industry already employs more than 135,000 people in Texas, and GA alone contributes $22 billion to the state’s economy. The state is home to approximately 1,300 repair shops, parts suppliers and other aviation businesses.
Bohac said industry support will be key in passing the legislation.
“We have a strong group of supporters and advocates working to educate their local legislators,” he said. “They’re showing how this bill puts Texas on a level playing field with the majority of states around the country.”