Raising Airline Taxes to Cut Deficit?

The U.S. Travel Association sent a letter to Congress asking it oppose any increases to aviation taxes in order to cut the federal deficit or fund the extension of the payroll tax cut.

In a statement, the association’s president and CEO, Roger J. Dow, notes: “Raising aviation taxes as a ‘pay-for’ is a budgetary sleight-of-hand that works in the halls of Congress but discourages travel, hampers job creation and slows economic growth in the real world.”

Dow added: “I urge you to oppose any proposal that raises aviation taxes as a means to ‘pay for’ the tax cut extension or to fund government programs unrelated to travel.”

The federal government assesses aviation taxes in a variety of ways. It slaps excise taxes on base ticket prices, on international travel facilities for overseas flights that begin or end in the U.S., or even flights that begin or end in Alaska or Hawaii, as well as taxes for things like transporting property by air.

Last August, members of Congress had blasted airlines' decision to boost base fares after these taxes temporarily lapsed because Congress failed to approve the extension of a bill to keep the Federal Aviation Administration running. That meant the FAA didn’t have the authority to impose these federal taxes that airlines add to the price of each ticket.

The Wall Street Journal reports that members of Congress and the White House have backed new legislation that would increase aviation taxes as a method to pay for deficit reduction or government programs unrelated to travel, the U.S Travel Association notes.

“Travel is not tobacco,” Dow says in the statement. “Treating it as such demonstrates a lack of recognition for the enormous tax burden travelers confront today and the benefits that travel brings to communities across the country."

He adds in his statement that: “Today, the average tax on a commercial airline ticket is 20%, which is higher than so-called ‘sin’ taxes on alcohol, tobacco or firearms that are levied to discourage their use.”

Dow also says higher aviation taxes will hurt jobs in the travel industry. “The 7.4 million (and growing) employees of the travel industry cannot afford Washington policies that punish Americans for traveling,” says Dow in his statement. “Our $1.8 trillion U.S. travel industry remains a rare bright spot in the U.S. economy that is experiencing modest growth, adding new jobs and serving as an economic multiplier throughout the country.”