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Airlines Oppose Tax IncreasesNovember 3, 2011 By: George Dooley Travel Agent
Airline members of the Air Transport Association (ATA) urged the Joint Select Committee on Deficit Reduction not to increase proposed taxes on the airline industry, passengers and shippers. The increases will have "significant unintended consequences" the ATA members said in a letter to Senator Patty Murray (D-WA) and Representative Jeb Hensarling (R-TX), co-chairs of the so-called "Super Committee" charged with charting a way out of the current economic downturn by reducing deficits and finding new tax revenues.
Proposed increases "will have significant unintended consequences that you may not have considered, including the loss of passenger and cargo air service to small and medium-sized communities, pressure on fares and the loss of 181,000 American jobs," the ATA members said, citing the critical economic role the airline industry plays.
"So far in 2011, U.S. passenger airlines collectively have earned $913 million – a profit margin of less than 1 percent. Part of our challenge to becoming sustainably profitable is our current tax burden. Aviation today pays 17 different federal taxes, totaling $17 billion annually. Air travel is taxed at a higher federal rate than alcohol and tobacco, products that are taxed to discourage their use. Taxes on a typical $300 round-trip ticket total more than $60, or 20 percent of the ticket price," the ATA members said.
"An analysis prepared for the airline industry estimates that the tax increases proposed by the White House would cost the economy as many as 181,000 jobs in 2012 alone. For passenger carriers, a 1 percent reduction in capacity leads to a direct and indirect loss of 78,000 jobs. It’s a simple equation: Fewer flights require fewer crews onboard, on ground, and in administrative support – all well-paying American jobs."
"The Administration has proposed tripling the security tax, raising it to $7.50 by 2017. This proposal alone will cost the airline industry at least $25 billion over ten years. They also have proposed a new $100 “departure tax” to be imposed on every flight operated in controlled airspace. This new tax will cost the industry an estimated $11 billion over ten years. Jobs will be lost and our economy further damaged if these $36 billion in taxes are imposed."
"We are especially concerned about any increase in security taxes. The airline industry paid $3.4 billion in taxes to the Department of Homeland Security in 2010 – a 50 percent increase from a decade ago. No other industry or mode of transportation is singularly responsible for funding security costs."
Managing the national debt must not be at the expense of our overburdened passengers and shippers or hundreds of thousands of American jobs, the ATA members said. American, Delta, US Air, Southwests and United Continental were among those who signed the appeal.