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Repeals of Rural Airplane Ticket, Floatplane Tax Sought


January 27, 2005

Washington - U.S. Sen. Lisa Murkowski on Wednesday introduced two provisions to repeal a rural airplane ticket tax that has been discriminatory to rural Alaskans for several years and a similar ticket tax on floatplane passengers.

Murkowski, who last year won approval of the two provision as part of the Senate-approved version of the Safe, Accountable, Flexible and Efficient Transportation Equity Act of 2003 (SAFETEA), reintroduced the measures today as her third and fourth bills of the 109th Congress in hopes that the reintroduction will speed efforts to win passage of the measures this year.

"For several years rural Alaskans have been unfairly burdened by having to pay airline ticket segment taxes on their flights into hub airports from rural communities. The tax is patently unfair to rural Alaskans since there is no other way for them to get to and from their villages to buy supplies or seek medical care other than by air. This is another attempt to end this discrimination," said Senator Murkowski, who was joined in sponsoring both bills by Sen. Ted Stevens.

The first amendment reduces the number of Alaskans who have to pay the segment tax for air travel to rural airports. Under current law, passengers nationwide are exempt from paying the now $3.20 "segment" tax if the airports they travel to have less than 100,000 passenger enplanements a year and are located 75 miles from the nearest airport that has over 100,000 enplanements a year. Airports receiving the Essential Air Service subsidy are also exempt.

But in rural Alaska where there are no roads that lead to villages closer than 75 miles apart, villagers end up paying the fee because of a technical glitch that still needs to be corrected. "While the segment fee was intended to cover increased security costs for airports handling large aircraft and international flights, the provision is a significant problem in my State," said Murkowski today in reintroducing the repeal proposals. The Murkowski amendment adds an exemption for airports "not connected by paved road to another airport" from having to impose the segment tax. "While 75 miles is not really a long way to drive to and from an airport, unfortunately the law assumes there is a road to drive on. And in Alaska that is not always the case. When there are no roads passengers can not choose to drive to the larger airports," she said. The amendment protects Alaskans from having to pay the tax when there is no transportation alternative within a 75 mile radius.

The second amendment also exempts seaplane passengers, those who fly on floatplanes to numerous small communities in Alaska, from paying the 7.5 percent ticket tax on scheduled floatplane service on top of the segment fee. Floatplane charters currently already are exempt from the tax.

"In nearly all cases floatplanes fly at low altitudes, and never enter controlled airspace, so they are not tracked by FAA personnel, don't utilize airport facilities and almost never incur costs to the government for maintaining airport facilities. There just is no reason why passengers have to pay the extra tax," said Murkowski, noting there are a number of seaplane operators in both Alaska and Washington State that never frequent airports that have benefited from federal Airport Improvement Program (AIP) funds - the original justification for the tax being levied.

The rural segment tax exemption would save Alaskans about $2 million a year by revised estimates, while the floatplane tax elimination would save under $1 million a year, according to the Congressional Joint Tax Committee. Murkowski said the changes would not have a significant impact on the federal treasury, especially since floatplane operators will be paying higher federal fuel taxes this year for aviation gasoline, but would have a huge impact on rural Alaskans.

"Over the course of a year a villager may have to fly into Bethel, or Juneau or Ketchikan on dozens of occasions for spare parts or for doctor visits. Such a passenger on a 70-mile trip is not taxing the nation's aviation system nearly as much as a cross country vacationer flying from New York to Los Angeles, nor do they have an alternative way of getting there. They shouldn't be charged the same," she said.

The bill now heads to the Senate Finance Committee for its consideration.



Source of News:

Office of U.S. Senator Lisa Murkowski
Web Site


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