Airline taxes part of Obama deficit plan
Friday, September 30, 2011
I'm getting on a plane today to head to the Financial Blogger Conference in Chicago.
The last time I flew, in July to the IRS Nationwide Tax Forum in Dallas, airline taxes were a hot topic.
Back then, the Federal Aviation Administration's ability to collect airline taxes had lapsed, creating confusion (and hope) that some passengers would get a tax refund.
This time it's new airline taxes that are on the radar.
As part of his jobs/tax reform/deficit reduction plan, Obama is seeking higher fees, aka taxes, on airlines and passengers.
The prez wants to immediately raise the passenger security fee, currently $2.50 for each leg of a trip, to $5 per travel segment.
The fee would rise another 50 cents a year from 2013 through 2017 to $7.50 per travel segment, or $15 round trip.
And the Homeland Security Department would have the authority to raise that charge even more.
Obama's numbers crunchers estimate that boosting passenger security fees will raise $24.9 billion over 10 years. Of that total, $15 billion would go to reduce federal debt.
But wait, there's more.
The White House also is proposing a surcharge of $100 per flight to help pay for air traffic control.
Although the Administration has focused on this fee's application to corporate jets, it also would also apply to regular airline flights. In fact, general aviation would end up providing most of the $11 billion that the surcharge would raise over 10 years.
These taxes are one of the rare times when airlines and passengers are united. Everyone hates the new airline taxes proposal.
Those of us who have to fly, and I say have to since few people any longer really enjoy the experience, are tired of the nickel-and-diming we're subjected to by the airlines. You can bet that the carriers will find a way, and quickly, to pass along any taxes or fees or surcharges or whatever you call them to passengers.
And that new amount would be on top of the $60 in taxes fees that already apply to a typical $300 round-trip ticket, according to the According to the Air Transport Association, the trade group that represents large carriers.
The Regional Airline Association, a group of smaller airlines, says the fees could lead to a loss of flights to smaller cities. "Aviation shouldn't be a piggy bank for every other purpose," says RAA president Roger Cohen.
We fliers know exactly what Cohen is talking about.
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