Bush Proposal Shifts Aviation Taxes from Tickets

WASHINGTON -- The Bush administration unveiled plans on Monday to increase taxes on business and private aircraft, a dramatic shift in how the government funds aviation that could reduce the portion that airline passengers pay.

Airlines lobbied heavily for the change, arguing that the current tax on airline tickets unfairly penalizes passengers while the rapidly growing number of private and corporate jets don't pay their fair share.

The airlines and federal transportation officials also argue that the new fee is necessary to help pay for a massive overhaul of the air traffic system, which cannot handle expected growth. The Federal Aviation Administration is planning to spend billions of dollars in coming decades to switch from radar to satellite technology for guiding planes.

"Without reforms, we can all expect to spend more time waiting in airports, or strapped in an airplane seat sitting at the end of a runway," said Department of Transportation Secretary Mary Peters.

The proposed increase in fuel taxes paid by non-airline aircraft faces fierce opposition from business aviation and pilot groups, who charge that the government has manufactured a funding crisis to justify a new tax.

The proposal is a "toxic mix of higher taxes, new fees and airline control," said Ed Bolen, president of the National Business Aviation Association.

"This is real, and it's just as bad as we thought it was going to be," said Phil Boyer, president of the Aircraft Owners and Pilots Association.

The plan also faces skepticism in the Democrat-controlled Congress. "I will definitely need to be convinced that abandoning the current structure is in the best interest of the flying public," said Rep. Jerry Costello, D-Ill., chairman of the House Aviation subcommittee.

Only vague outlines of the proposal were included in the White House budget proposal. Details will not be released until next week.

The foundation of the plan calls for a large shift in who pays for the air traffic system. Private flights make up 11% of traffic but pay only 3% of aviation revenue, said FAA Administrator Marion Blakey. The proposal would replace the current patchwork of taxes and fees with a system that charges each flight an amount equal to the cost of the air traffic services it uses.

Airlines would be charged a user fee for each flight by 2009, and the ticket taxes paid by passengers would be scrapped, Blakey said. Passengers now pay 7.5% of the cost of a ticket, plus $3.30 per domestic flight or $14.50 per international flight.

Private aircraft and charter flights would not pay a user fee but would see taxes on fuel rise so that they pay an equivalent share, Blakey said.

The government raised $11 billion last year from taxes on tickets and aviation fuel.

Loading