Who makes up the difference when sales tax is waived for aircraft owners’ maintenance costs?

Here’s something to think about…

…when special interest groups succeed in getting tax relief for their constituents, the rest of the population has to make up the lost tax revenue. So, when aviation lobbyists succeed in passing state laws that exempt aviation parts and maintenance from sales tax, the bill is effectively shifted to non-aviators.

The Governor of Pennsylvania, Tom Corbett, just signed such a bill into law. What does this mean? If you take your car to a shop in Pennsylvania for repairs, they will install parts and charge you for their labor, and you will pay a 6% sales tax. But, if you happen to own an airplane, too, the elected officials in your state want to reward your wealth (or, maybe they are just worried about your financial situation?), so they are granting you an exemption from sales tax on repairs to your $50,000 Cessna or $10 Million business jet.

So, if I understand this correctly, a low-wage resident of Philadelphia, raising a family and trying to make ends meet has to pay sales tax to fix the car needed for her commute to work, while the retired venture capitalist with a Citation Jet who likes to fly a few junkets to Palm Springs and Florida every year … he pays NO SALES TAX. Do I have this right? (…and IS THIS RIGHT???Note, also, that passage of this law was done using the same sneaky/slimy tactics we have seen too many times at the federal Congressional level: the language was slipped into an omnibus bill, which helps to shield it from meaningful deliberation.

The argument FOR this absurd new law is that the state loses work and tax revenues, if expensive aviation maintenance is ‘leaked’ out of state, and done in say New York or Ohio. For example, if the jet owner wants to, when he does not need the jet (as in, between golfing junkets) he can have his jet flown out of state for those repairs. Well, there are other (better) laws that would stop this leakage, if elected officials were not so partial to representing monied interests. Maybe, for example, the new law could have declared that a tax of up to 6% is due for all ‘value added” via out-of-state maintenance costs for aircraft based in Pennsylvania (and the owner could reduce the tax due to Pennsylvania by the amount of taxes paid for those out-of-state repairs).

The argument AGAINST this absurd new law is that it looks mighty unfair to shift the tax burden away from those who can afford it, and to those who cannot. And, it does not help the public perception (which in most cases is a gross misperception) that aircraft owners are greedy fat cats. In other words, this new Pennsylvania law is a coup for a few aircraft owners, and a promo tool for AOPA to recruit new members, but at the cost of fueling public opposition to general aviation.

Here’s a copy of the press release, by the Aircraft Owner’s and Pilot Association (AOPA):

AOPA Wins Pennsylvania Decision to Lift Tax on Aviation Maintenance, Parts

July 12, 2013

Frederick, MD – The Aircraft Owners and Pilots Association (AOPA) Friday welcomed Pennsylvania Gov. Tom Corbett’s signature on a bill that eliminates the six percent state sales tax on the retail sale of aircraft parts and maintenance.

“This bill creates major cost savings for aircraft owners,” said Mark Kimberling, AOPA’s director of state government affairs. “It will also boost the competiveness of Pennsylvania’s aviation industry in a region where neighboring states with similar benefits have siphoned off aviation jobs and investment. This tax measure will level the playing field and stem the exodus of aviation activity and jobs.”

When the Senate did not act on the bill in 2012, advocates in the state legislature reintroduced it in 2013. The tax exemption measure eventually became part of an omnibus budget-related bill, ensuring that it would be considered during the state’s House, Senate and Governor’s office budget conference.

“AOPA and the Aviation Council of Pennsylvania have pressed for this legislation for several years,” Kimberling said, “knowing that it would prove vital to Pennsylvania’s pilots and aviation businesses.”

AOPA simultaneously worked to defeat a proposed Pennsylvania tax of 2-cents-per-gallon on jet fuel.

Gov. Corbett signed the bill July 10. The tax exemption takes effect 90 days from that date, marking the latest win for pilots and aircraft owners as part of AOPA’s comprehensive nationwide advocacy effort.

Pennsylvania, despite recent industry challenges, remains as one of the larger general aviation states in the nation with over 17,000 pilots, 6,000 GA aircraft and 131 public-use airports.

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About AOPA
Since 1939, AOPA has protected the freedom to fly for thousands of pilots, aircraft owners and aviation enthusiasts. With a membership base of nearly 400,000, AOPA is the largest aviation association in the world. With representatives based in Frederick, M.D., Washington, D.C., and seven regions across the United States, AOPA provides member services that range from advocacy at the federal, state, and local levels to legal services, flight planning products, safety programs and award-winning media products. To learn more, visit www.aopa.org.
Copied 7/18/13 from: http://www.aopa.org/News-and-Video/All-News/2013/July/12/AOPA-Wins-Pennsylvania-Decision-to-Lift-Tax-on-Aviation-Maintenance.aspx