MYTH #1 – Aircraft Are Luxury Items
Aircraft are motor vehicles, in the same regard as automobiles and trucks. A great many are operated by Washington businesses, and the majority of the 8,100 Washington-based aircraft are older, single-engine airplanes, owned by individuals or shared partnerships, and have a value that is at or below the price of a new car or truck.
More importantly, they provide air transportation to every community and privately owned airport in Washington. Only Seattle, Spokane, Tri-Cities, Wenatchee and Yakima are served by airlines. The remainder of the 138 public-use airports depend on general aviation.
Washington is home to 59 charter flight companies, 116 repair stations, and 24 flight schools operating 181 aircraft serving more than 2,000 students and providing 360 jobs. In addition, there are 64 fixed-base operators in the state. General aviation schools provide nearly all the training for future airline pilots, unlike in decades past when they were largely trained by the military.
MYTH #2 – Aircraft are undertaxed.
A combination of six direct state and federal taxes make general aviation one of the most heavily taxed activities in the state.
1. Business & Occupation Tax
2. Sales or Use Tax
3. Washington State Registration Fee
4. Washington State Aviation Fuel Tax.
5. State Sales Tax on aviation fuel, including the fuel tax; aviation is the only form of transportation wherein the sales tax applies to fuel with no refund available to the user.
6. Federal Fuel Tax of 19.4 cents per gallon.
MYTH #3 – Lack of excise tax on aircraft is a ‘loophole’.
General aviation already pays an additional fuel tax, from which air carriers are exempt.
Washington is already the most expensive state in the Northwest to base aircraft. Using the example of a 1980 Cessna 206, based in Seattle, here are the facts:
Annual Registration – WA $65, OR $55, MT $75, ID $36
Aviation Fuel Tax – 0 WA 11 cents, OR 9 cents, MT 4 cents, ID 7 cents
Sales Tax – WA 9.5%, OR None, MT None, ID 6%
MYTH #4 – Anyone rich enough to own an airplane is rich enough to pay the tax.
In our current economic downturn, there are many aircraft owners who cannot afford to own the airplane they have. Hangars are full of infrequently flown aircraft and airports which formerly had multi-year hangar waitlists now have empty hangars.
Aircraft sales have plummeted. The General Aviation Manufacturers Assn reports new aircraft sales dropped 24% from 2008 to 2009. Used aircraft are almost impossible to sell, and with owners financial situations in peril, a great many owner has the aircraft in “maintenance-mode”, flying minimally.
There is some unknowable percent of owners to whom our economic woes don’t matter. Another section is a group of owners who fly for business and whose margins are razor-thin. Then is the category of those discussed above, reduced to being stewards of a motor vehicle which does not tolerate inattention, and soon begins a deadly corrosion cycle.
If an additional tax were levied on all but the very wealthy, it would be a “deal-breaker” for many aircraft owners and aviation businesses. As in the housing real estate market, the large number of aircraft financially “underwater” might be given up for repossession by lenders.
MYTH #5 – Airports are supported by general tax revenues.
Only a very minor portion of airport expenses are paid for by general tax revenues. Some small airports receive limited local tax support, while larger airports are self-supporting. Public airports generate most of their support through user and landing fees, and ground, hangar and building rentals.
Washington’s Aeronautics Account got Federal Funds in the amount of $2.15 million in the 2007-2009 biennium. In the same period, $4.962 million was received from aircraft taxes, registrations, and license fees. This revenue is used in support of Washington aviation by WSDOT Aviation, including 138 public use airports in the state.
About $250,000 of aircraft registration revenues is deposited into the state’s General Fund.
And finally … Consider the hourly operating cost of just state taxes alone in aircraft operation. Using the same example airplane, a 1980 Cessna 206, averaging 100 hours/year, with a fuel consumption of 15 gallons/hour at $5.00 per gallon, and a purchase price of $150,000.
Amortizing the purchase over 5 years, the annual sales/use tax is $2,850.
The fuel tax is $165. The fuel sales tax is $712.
Sales tax on maintenance of $2,000 is $190, and a registration fee of $65.
That’s a total of $3,982 in annual state taxes, which converts to a cost per hour flown of $39.82.
If a 1% excise tax replaced the registration fee, the total would become $5,418, increasing the hourly cost by 36%, or $54.18 per hour flown.