The airline industry, reeling from increases in jet-fuel prices, asked Congress on Wednesday for a one-year "holiday" from the federal fuel tax, although it is unclear how lawmakers will proceed.
In a hearing about the jet fuel price increases, James May, president and chief executive of the Air Transport Association, told the Aviation Subcommittee of the Senate commerce committee that the industry needs relief from the 4.3 cents a gallon jet-fuel tax -- a break of $600 million -- for one year.
"In this post-Katrina economic environment of higher fuel prices and lost revenue from Gulf Coast tourism, we are projecting additional losses of at least $9 billion in 2005 -- up from earlier projections of $5 to $7 billion," May said.
"And while there is nothing that can be done in the short term to reverse the continuing damage that high fuel prices are having on the industry, the government can take a step to help -- grant a one-year holiday from the 4.3 cents per gallon jet-fuel tax."
May noted that the tax, imposed in 1993, was supposed to be temporary but has never been repealed.
Sen. Ted Stevens, R-Alaska, chairman of the Senate Commerce, Science and Transportation Committee, attended the hearing and was supportive of the request and of reductions in other fees. But he said it was up to Senate Finance Committee to decide revenue issues. Sen. Charles Grassley, R-Iowa, is chairman of the Finance Committee.
Earlier in the week, Stevens said: "Well, I think that we've suspended taxes before. I've had some talks with Chairman Grassley, but let's see what we develop in the record of what's necessary. I do think the transportation mechanism in the country, really, the backbone of it is air transportation. And, coming from a state like mine, it's absolutely necessary."
A senior House transportation aide said: "There's concern about the financial health of the industry but concern that if you do it for aviation you have to do it for trucking, shipping, rail and the driving public who all pay fuel taxes. You can do that and you can open the floodgates."
