Key Democrats Eye Fuel Tax Hikes
Kerry Lynch
House Transportation and Infrastructure Chairman James Oberstar (D-Minn.) and aviation subcommittee Chairman Jerry Costello (D-Ill.) last week encouraged their counterparts on the Ways and Means Committee to resurrect a proposal that would keep the current system of aviation excise taxes intact, but increase the tax rates on jet fuel and aviation gasoline. The T&I leaders also urged the Ways and Means Committee to move forward expeditiously on the taxes portion of FAA reauthorization.
The T&I Committee passed its version of a comprehensive FAA reauthorization bill, H.R. 915, in March. But the Ways and Means Committee, which has jurisdiction over the taxes piece of reauthorization, must complete its work before the House will take up consideration of the bill. FAA currently is operating under a temporary extension of the reauthorization, but that authority is set to expire Sept. 30.
"This legislation was supposed to be completed in September 2007," Costello told the committee in testimony. "The reauthorization process has been bogged down because of inaction by the Senate. We need to get FAA reauthorized." While different stakeholders may dispute the specifics, they are in agreement on the need to get the bill done as soon as possible, Costello added. Ways and Means Chairman Charles Rangel (D-N.Y.) agreed that the legislation must avoid another temporary extension.
Some Rates Previously Endorsed
Oberstar and Costello recommended that Ways and Means increase the general aviation jet fuel tax rate from 21.8 cents per gallon to 35.9 cents per gallon and increase the avgas tax from 19.3 cents per gallon to 24.1 cents per gallon. These were the same rates the Way and Means Committee endorsed in the previous Congress.
"I believe that the programs we have authorized can be funded by existing aviation excise taxes, coupled with a reasonable General Fund contribution that is consistent with what the industry has requested and a relatively small increase in revenue derived from general aviation fuel taxes," Oberstar said in testimony before the committee.
The aviation excise taxes have proven a stable and adequate source of funding, he stressed, saying, "Changes to the current system of excise taxes should be made only if such changes will improve upon this record of stability, revenue adequacy and ease of administration."
Oberstar added he believed that it would be equitable for general aviation users to pay more since their tax rate has not increased in 15 years. GA turbine operators account for 8.3 percent of the flights using the ATC system but contribute about 2.9 percent of the revenues into the aviation trust fund supporting the system, he noted. GA piston operators comprise 7.8 percent of the flights using ATC, but contribute 0.3 percent of the trust fund revenues.
While GA should pay more, Oberstar added airlines should not pay less. "Airlines will receive by far the most benefit from NextGen-related capital investments, which will make airlines more efficient and more profitable. Airlines stand to save billions of dollars annually from fuel savings."
Mica Seeks Alternate Plan
Rep. John Mica (R-Fla.), however, urged Ways and Means leaders to "consider working with FAA to develop alternative ways" to ensure trust fund commitments match revenues. "Congress must seriously examine what we can do to help stabilize the Airport and Airway Trust Fund and ensure that it remains a viable tool for financing our aviation infrastructure needs," he said.
The uncommitted balance in the aviation trust fund is depleting, he said, noting the balance has dropped from $7.3 billion at the end of fiscal 2001 to $1.4 billion at the end of fiscal 2008. He also cited Congressional Budget Office (CBO) estimates that the balance could fall to $752 million this year.
"If we resign ourselves to regular general fund fixes, infrastructure funding becomes much less reliable and addressing our already tremendous infrastructure needs becomes even more difficult," Mica said.
He also noted that the strains on the ATC system are not necessarily tied to aircraft size or type and said the committee should craft a proposal that is fair and equitable for all stakeholders.
CBO Deputy Director Robert Sunshine testified that "FAA would continue to exceed aviation-related revenues if the current taxes were extended." He suggested that revenues aligned with costs would ensure that the users bear most of the costs of providing ATC and taxes would be more aligned with the activity rather than airline ticket prices. "Allocating costs efficiently and fairly among different types of users presents challenges, however - especially for systems that are capital intensive, like the air traffic control system," Sunshine said.
While users should shoulder the brunt of the costs, he admitted that the general public derives some benefit from the aviation system and the general fund should cover part of the costs.
Van Nuys photo credit: Los Angeles World Airports
