Exemption Set To Expire At The End Of The Year

A state sales tax exemption on general aviation repairs, maintenance, and parts enacted five years ago by former New York Governor George Pataki is set to expire at the end of 2009, and some fear the move could severely damage GA in the state.

New York aviation officials told the Albany Times Union that many businesses have considered the tax break when deciding on a location. Albany County Airport Authority CEO John O'Donnell told the paper when the exemption on repairs and maintenance was enacted, the industry "experienced a substantial boom in business". He is also seeking sales tax relief for aircraft purchases. Other northeastern states, including Massachusetts, Connecticut, New Hampshire, Rhode Island, New Jersey and Delaware, offer such incentives.

Still, not every business has endured. Eclipse Aviation has gone into bankruptcy liquidation, closing its factory maintenance center in Albany.

The move comes as tax receipts across the nation have declined, and shrinking budgets have caused state legislatures to look for increased revenue. In New York, a 5 percent luxury tax on new general aviation aircraft costing more than $500,000 was considered, but defeated in the State Assembly.

A study by the state Department of Taxation and Finance found that FBO's reported increases in taxable sales after the exemption was enacted, but would not go so far as to say whether it was a direct result of the tax break.

FMI: http://assembly.state.ny.us/