Money Would Be Intended For A 10-Year Infrastructure Fund

As lawmakers in New Jersey consider how to build up a $20 billion, 10-year infrastructure fund, they are looking at a tax on jet fuel as a revenue stream.

Politico reports that the state has a "steady stream" of jets operating at Newark Liberty International Airport. But corporate jets flying from smaller airports such a Teterboro are also seen as a potential piggy bank. The move would amount to a tax increase on companies that ship by goods by air.

State Senator Paul Sarlo (D) said that the tax would shift some of the burden for funding the infrastructure account to out-of-state travelers who use the state's infrastructure.

But the FAA requires that all fuel taxes be used only for airport infrastructure improvements or operating costs. State Senate President Stephen Sweeney said he does not see that as a particularly large hurdle.

The state currently collects about $8 million in jet fuel taxes. The legislation would place a seven percent tax on aviation fuel, both gasoline and jet fuel, or as much as 13 cents per gallon. The state estimates the increase could raise at least $140 million per year. Over the 10 years of the authorization, that's $1.4 billion from aircraft operators.

Sarlo said he had not heard of the FAA's requirement to use all fuel taxes for aviation purposes, but said he is confident that "we could restrict this money to improvements in and around the airport."

State Senator Steve Oroho (R), a co-sponsor of the legislation with Sarlo, told Politico he was aware of the FAA's rules, and his staff is monitoring a legal challenge to the rule in Georgia that is working its way through the courts.

In a letter to the leadership of the New Jersey State Senate and General Assembly, NATA President and CEO Thomas L. Hendricks (pictured) requested state lawmakers oppose a proposed increase in state aviation fuel taxes stating the proposal, “will likely not have the intended effect of raising revenue but rather reduce investment and good paying jobs in New Jersey.”

NATA represents 39 member companies in New Jersey, part of a state general aviation infrastructure that represents 16,200 jobs in New Jersey with a contribution to state GDP of $1.78 billion.

Hendricks told lawmakers, “The legislation fails to recognize the unique nature of aviation, which allows stakeholders to simply fly to the state that affords the best value. In fact, these proposals are outside of what NATA sees nationally, where states are adopting tax statutes to make their aviation businesses more, not less, competitive with those in adjoining states.” Hendricks cited a recent example in New York where, in response to tax levels in adjoining states, the New York state legislature approved a sales and use tax exemption effective September 1, 2015, on the sale of general aviation aircraft and for machinery or equipment to be installed on general aviation aircraft.

Hendricks closed reminding state lawmakers that “revenues derived from state aviation fuel taxes may only be used for aeronautical purposes. In 2014, the Federal Aviation Administration reaffirmed this long-standing policy noting that state taxes on aviation fuel are subject to use either for a state aviation program or for airport-related purposes.”

(Sources include NATA news release. Images from file)

FMI: www.njleg.state.nj.us, www.nata.aero