Idaho Governor Butch Otter has signed bill H.417, which exempts sales tax on aircraft parts installed on out-of-state aircraft. An emergency clause included in the legislation makes the bill take effect immediately.
“This is an excellent piece of legislation that creates a net financial gain for the state of Idaho,” said Jeff Mihalic, president of Western Aircraft. “It immediately levels the playing field and will create good-paying aviation jobs at Western Aircraft and at many of the other FAA-approved repair stations in Idaho.”
According to Mihalic, the 6-percent tax on parts created a “significant economic disadvantage” for Western, particularly when it came to large refurbishment projects. “Over the past few years we’ve invested heavily in interiors and avionics capability and we’ve added the Challenger 300 and 600 series to our maintenance capabilities. We’ve also expanded our sales force to pursue a much larger market. Elimination of the sales tax will allow us to be more successful capturing new business and expanding our market share, which in turn drives our staffing requirements. Without this legislation, Western’s growth would be modest at best,” he told AIN.
Mihalic said Western Aircraft has been trying for three years to influence the change in the state law as Western’s primary competitors currently operate in states that do not tax parts installed on aircraft during maintenance.
“Western Aircraft has committed to adding 100 jobs over the next five years and making significant investments in our facilities as a result of this legislation. To meet the expected demand, we have already created 12 new positions to be filled by new full-time employees in the coming months,” he said.
Florida has also reconsidered its position on aviation-related taxation. The Florida Aviation Trades Association (FATA) announced the passage of legislation that benefits both aviation businesses in Florida and aircraft owners. According to Paula Raeburn, FATA’s executive director, her organization worked closely with the Florida Airports Council (FAC) to change the language of the statute to clarify that FBOs are exempt from an intangible tax.
Sandy Showalter, FATA president, said, “The passage of HB.7087 marks a huge victory for both FATA and the aviation industry that is so vital to Florida’s economy. I can speak firsthand to the effect that the FBO intangible tax exemption will have; the state had already given my family’s FBO our tax bill and paying it would have wiped out some hardscrabble savings cobbled together during these last few very lean years. This exemption gives us the confidence to fill two open positions that we have been doing without for several months, and that is no hyperbole.”
A joint effort between FATA and the Aircraft Owners and Pilots Association has resulted in decreasing the weight of aircraft eligible for tax exemption on parts and labor to 2,000 pounds from 15,000 pounds.
“Several states have sales-tax exemptions on labor and maintenance done on aircraft. The preexisting Florida law provided a sales-tax exemption for aircraft with a maximum takeoff weight of more than 15,000 pounds. The change now gives the tax exemption to aircraft weighing 2,000 or more, making most general aviation aircraft eligible. This will put Florida on a more competitive playing field,” Raeburn said.