Tax bill to boost aviation clears Indiana Senate

February 27, 2013

An AOPA-backed bill to spur aviation activity in Indiana by exempting avgas and aircraft maintenance from sales taxes has passed the state Senate on a unanimous vote.

The Senate’s Tax and Fiscal Policy Committee on Feb. 19 had given unanimous backing to Senate Bill 494, which supporters said would make Indiana more competitive by lifting the added tax burden from aircraft maintenance businesses, and by bringing state fuel-tax policy into line with other states in the region.

Mark Kimberling, AOPA director of state government affairs, and Bryan Budds, AOPA Great Lakes regional manager, worked in tandem with Eagle Creek Aviation and Muncie Aviation to explain how the measure could revitalize aviation businesses and spur general aviation activity in Indiana.

Currently, Indiana is one of only a handful of states that have both a sales tax and an excise tax on avgas on the books—making it the highest aviation fuel tax rate in the nation with current oil prices, they told lawmakers. In addition, Indiana has fallen behind several states in the region that presently don’t charge sales tax on aviation maintenance, most notably neighboring Ohio. This has resulted in an exodus of aviation business and jobs to other states. To emphasize the significance of this tax disadvantage for local businesses to the Senate Committee, Matt Hagan of Eagle Creek Aviation held up his iPad during the hearing to display an actual Ohio maintenance shop’s home Web page with a large advertisement that read No Sales Tax—avoid Indiana’s sales taxes.

During its advocacy effort, AOPA’s government affairs team has made multiple trips to Indianapolis to build support for the bill, including giving testimony before the Senate’s Tax and Fiscal Policy panel.

“AOPA has worked extensively on this issue with key local allies, like Indiana shop owner Matt Hagan, to get to this significant step of Senate passage and we will continue to work hard to see this through the House,” said Kimberling. The bottom line, which has resonated among lawmakers, is that Senate Bill 494 should be viewed as an overdue, vital tax correction measure to both bring Indiana’s fuel tax rates into the same ballpark with the national averages, and level the playing field for Indiana’s numerous maintenance shops. “Doing so will do much to stop the steady decline of aviation activity, jobs, and investment that we have seen over the past several years in Indiana,” Kimberling added.

AOPA also expressed appreciation for the outstanding leadership and support of the issue from Sen. Brandt Hershman (R-District 007), Sen. Ryan Mishler (R-District 009), and Sen. Lindel Hume (D-District 048), as well as House Speaker Brian Bosma (R-District 088), and Ways and Means Chair Dr. Tim Brown.

Eliminating the tax, said Hershman—who was the bill’s lead sponsor in the Senate—“would support further expansion of Indiana’s growing logistics sector, bolstering our reputation as ‘The Crossroads of America.’”