March 2, 2011
By AOPA ePublishing staff
Two proposed bills in Connecticut—a hefty annual tax on aircraft owners and the elimination of the sales tax exemption for labor on repairs on small aircraft—could devastate the state’s aviation industry and drive business to neighboring states, AOPA is warning lawmakers.
Gov. Dannel P. Malloy proposed the legislation as part of an effort to close a budget gap of about $3.2 billion to $3.5 billion. AOPA has joined with other aviation organizations to explain to legislators and senior administration officials that the proposals will harm Connecticut businesses and the state’s aviation industry.
“Given the low aviation tax environment of the region and the small size of the state, these twin tax increases are likely to cause a mass migration of aircraft out of the state , and a huge loss of aviation business activity,” said AOPA Vice President of Airports and State Advocacy Greg Pecoraro. “The impact of this literal flight of aviation from Connecticut will result in an almost immediate net loss in revenue to the state, which will only worsen its fiscal situation.”
Currently, aircraft based in Connecticut are required to pay a yearly aircraft registration fee. HB 6387 would impose a 2-percent tax on the first 70 percent of the assessed value of all aircraft based in the state every year, resulting in a significantly higher tax liability for based aircraft. No states in the region currently impose a personal property tax on aircraft, and no other state in the nation charges both a registration fee and a personal property tax.
In addition, SB 1007 would essentially eliminate Connecticut’s current sales tax exemption for general aviation aircraft repair services: It would remove the exemption from the state’s 6-percent sales tax on repair services for aircraft with a maximum certificated takeoff weight of less than 6,000 pounds. (The exemption would remain in place for larger aircraft repair services and for aircraft repair or replacement parts.) More than 100 repair stations are located in Connecticut.
“For its size, Connecticut has a large number of private aircraft and a huge aviation services industry,” Pecoraro said. “If these tax changes are enacted, the loss of competitiveness with neighboring states that have more favorable tax policies would be devastating—in terms of business, revenue, and, certainly, jobs.”
General aviation contributes $2.4 billion to the Connecticut economy. AOPA members in Connecticut should be on the lookout for Action Alerts from the association that will be targeted to different legislators at key points in the legislative process.
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