Issue Brief: Aviation excise taxes

Issue Brief

Aviation Excise Taxes

All federal funds for capital improvements and research for the airport and airway system, and half of the Federal Aviation Administration's funds for operations, come from the Airport and Airway Trust Fund. The Trust Fund's contribution to aviation adds up to 70% of FAA's annual budget. The Trust Fund receives its revenue from excise taxes on aviation users, including taxes on the aviation gasoline and jet fuel used by general aviation aircraft. General aviation users pay state taxes on fuel as well.

Calls for changes to the overall aviation excise tax system have come from many sources. The Clinton Administration has proposed replacing the taxes with user fees. A group of large airlines have proposed restructuring the taxes by combining the current percentage levy on airline tickets with new flat fees. The House Ways and Means Committee is now considering such a change as part of its budget reconciliation package. The Ways and Means bill does not include an increase in the taxes on aviation fuel.

Some critics have charged that general aviation does not pay its "fair share" for the airport and airway system. Critics point to the large number of general aviation aircraft and their activity as evidence that general aviation should pay more. Of the 189,000 civil aircraft in the U.S., 96 percent are general aviation aircraft, and they account for 75 percent of flights. These numbers don't tell the whole story, though.

The ATC system was built to accommodate the needs of the airlines, which carry 86 percent of all the passengers who fly. General aviation places a miniscule burden on the air traffic control (ATC) system. Many people unfamiliar with the ATC system are surprised to learn that of the nation's 18,000 aircraft landing facilities, only 683 have air traffic control towers. In most places, general aviation follows traffic rules that require very little in the way of air traffic control.

The burden the airlines place on the ATC system is magnified by the requirements of the hub-and-spoke system most use, which puts a very high demand on the system at hub airports during peak periods. Almost every part of the ATC system would exist in its present state even if general aviation did not exist.

In fact, AOPA and the general aviation industry is working with the FAA to reduce the costs of services unique to general aviation. For instance, AOPA worked with FAA to make possible the closure of auxiliary flight service stations in the continental U.S. Further savings could be achieved through the modernization of the flight service station network, which could include ideas such as contracting out of FSS facilities.

An increase in the tax burden on general aviation, which has already suffered two fuel tax increases in the last seven years, would severely depress an important industry just when it is recovering from economic decline. General aviation's recovery comes in the wake of two important congressional actions aimed at saving it - the General Aviation Revitalization Act, which limited the liability of general aviation aircraft manufacturers, and the repeal of the so-called luxury tax.