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"Inouye panel OKs changes in airline, private jet taxes"



Thursday, May 17, 2007

Inouye panel OKs changes in airline, private jet taxes
Bloomberg News


WASHINGTON -About $150 million a year in taxes would shift from airlines to
corporate jet users under legislation approved by a Senate committee today.

Costs for corporate jet and turbojet users would increase $500 million
annually, if the measure becomes law. It calls for eliminating a 4.3
cent-a-gallon airline fuel tax and boosting the levy for corporate jets.

Airlines have been in and out of bankruptcy in recent years, said Sen.
Daniel Inouye, the Hawaii Democrat who chairs the Commerce, Science and
Transportation Committee. "I don't wish to add any more to their burden."

The bill partly delivers on a broader push by the Bush administration and
carriers including AMR Corp.'s American Airlines and UAL Corp.'s United
Airlines. They want to tie air-traffic control costs to the level of use by
various aviation segments.

A use-based system, according to the Federal Aviation Administration, would
raise costs for small-jet operators including General Motors, Exxon Mobil
and NetJets, the business-jet charter company owned by Warren Buffett's
Berkshire Hathaway Inc.

To make costs more use-based, the Senate proposal creates a $25-a-flight fee
to finance air-traffic control upgrades. Airlines and corporate jets would
pay the same fee, regardless of the number of passengers on each flight.

One-Vote Margin

An amendment to strike the fee from the legislation, pushed by small-plane
groups, lost on a 12-11 vote. The tally was tied 11-11 until Sen. Ted
Stevens, an Alaska Republican, changed his vote from "pass" to opposition.

"We don't need a new user fee," said Sen. John Sununu, a New Hampshire
Republican and co-sponsor of the amendment. "The existing system can handle
the anticipated costs."

Congress is trying to pass the $65 billion, four-year FAA budget plan before
existing taxes and fees that finance the agency expire on Sept. 30.

The Senate plan cuts fees for the commercial carriers and raises them for
corporate jets, much less than Bush proposed. The administration sought to
cut airline taxes by $1.68 billion, shifting about half that to corporate
jet and turbojet users.

Users of small piston-engine propeller planes, who would face higher fuel
taxes under the Bush plan, are exempt from gas- tax and user-fee increases
under the Senate plan.

The legislation now goes to the Senate Finance Committee. The Commerce
Committee has recommended fuel-tax changes. The Finance Committee has the
authority to enact them.

The Senate plan rejects a push by airports to raise an airline fee for
construction projects to $7.50 from $4.50. It lets pilots fly until age 65,
and it requires airlines to let passengers leave ground-delayed planes after
three hours unless carriers have plans for such situations.

House transportation committee lawmakers haven't yet introduced their
version of the FAA budget bill. House and Senate lawmakers will need to work
out differences in their two proposals before sending one to Bush for his
signature.

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