Fri, May 27, 2011
Principato: Law Would Turn Airports Into Tax Collectors
In testimony submitted to the House Small Business Committee's
Subcommittee on Contracting and Workforce, Airports Council
International-North America president Greg Principato
(pictured) stressed that the preparation for and
implementation of the law will carry significant administrative and
financial burdens at a time when airports are facing dramatic cuts
in federal funding.
The commmittee has proposed a 3% withholding of government
payments for products and services, required under Section 511 of
the Tax Increase Prevention and Reconciliation Act of 2005 (P.L.
109-222). In his testimony, Principato stated that airports are too
often subjected to these types of financial burdens and, "as an
industry we already pay higher debt services costs on bonds issued
for large scale projects. With over 50% of airport
improvements financed with debt, the loans issued for the majority
of those projects, known as private activity bonds (PABs), carry an
Alternative Minimum Tax (AMT) penalty. This penalty has resulted in
higher construction costs, sometimes reaching tens of millions of
dollars, which ultimately must be passed along in higher costs for
business and leisure travelers."
Additionally, Principato stressed that
the federal government should not put airports in the position of
collecting federal taxes or enforcing federal tax laws. "The
3% withholding regulation will put our industry in the position of
not only playing our current role as landlord but we will also be
forced to play the role of tax collector."
"We ask that you work to repeal the 3% withholding regulation,"
Principato urged. "The impact the regulation will have on airports,
airport contractors, airport subcontractors, small businesses that
serve airports, and ultimately our local communities will be costly
and burdensome."
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