Prodded by perceived FAA failings and the threat of summer air travel delays, the Senate Transportation and Finance Committees reached agreement late last week on how to fund the FAA for the next four years. If the bill is approved by the full Senate today, it is expected to keep avgas taxes at the current rate of 19.3 cents per gallon but increase jet fuel taxes to 36 cents per gallon, up from 21.8 cents.
The International Civil Aviation Organization (ICAO) has ruled out introducing taxes on jet fuel for commercial operators for at least three years. In a hard-fought deal struck at the close of the organization’s assembly on October 8, ICAO delegates agreed that no fuel taxes or charges can take effect before its next triennial assembly in the fall of 2007.
Congress last month once again extended the FAA’s current authorization and aviation taxes until December 14, making it increasingly unlikely that the question of how to pay for operating the FAA and simultaneously modernizing the entire air traffic system will be settled anytime soon.
The Senate Finance Committee has approved a bill that would repeal the onerous “fuel fraud” provision enacted into law as part of the 2005 Highway Bill. Although the law dealt with surface transportation, it contained a provision that aviation jet fuel taxes be collected at the highway diesel fuel rate of 24.4 cents per gallon as opposed to the aviation rate of 21.9 cents per gallon.
General aviation late last week won a major battle, but not yet the entire war, against user fees. The House of Representatives last Thursday approved H.R.2881, the FAA Reauthorization Act of 2007, and the next morning the Senate Finance Committee drastically modified the tax provisions in its companion bill, S.1300.
The House Ways and Means Committee today passed H.R.3539, a tax code modification companion bill to H.R.2881, the House FAA reauthorization legislation. In a victory for general aviation groups, the committee voted to keep airline taxes, including the airline fuel tax, at existing levels. Under the legislation, avgas taxes would increase from 19.3 to 24.1 cents per gallon and the jet-A tax would rise from 21.8 to 35.9 cents per gallon.
With Congress out of town for its “summer district work period,” there was little action on the FAA’s reauthorization bill, and the nagging question of how to fund the agency for the next four years hung over the legislature as the September 30 deadline loomed.
Lawmakers departed early last month for a 25-day hiatus, but the rhetoric between the nation’s airlines and general aviation over user fees continued apace.
With stark differences between House and Senate versions of FAA reauthorization bills working their way through Congress, some industry and congressional insiders see little chance of an agreement before September 30, the day when current taxes and fees that support the FAA expire.
The Senate last week passed the Surface Transportation Reauthorization Act (the “Highway Bill”), which authorizes surface transportation spending through fiscal year 2009. The legislation includes two provisions that could affect business aviation if signed into law, according to NBAA.
The House Transportation Committee’s attempt at an FAA reauthorization and funding bill has received praise and backing from general aviation interests, but they warn that the fight for passage without user fees is far from over.