Proposal Calls For Lifting Taxes On Air Service And Maintenance

A Kansas bill aimed at generating more aircraft service and repair work within the state is headed for the Senate after gaining House passage. The measure's chief sponsor, Republican Rep. Mario Goico of Wichita, estimates it would create 500 new jobs in Wichita. The bill would remove the state and local sales tax -- a combined 6.3 percent in Wichita -- on service, repair and remodeling of airplanes. The change would cost the state about $1.3 million.

On a 77-41 vote, Goico successfully attached the exemption to another tax bill during House debate last week. All Wichita-area representatives voted for the measure. The proposed legislation would benefit manufacturers like Cessna Aircraft Co, which is preparing to open a new $60 million Citation production facility this fall. The company estimates the exemption could increase employment by as many as 80 people, adding as much as $3 million to its payroll.

Scheduled service work packages at Bombardier Aerospace typically cost $100,000 to $200,000, a company official told lawmakers. Removing the sales tax cuts the price tag by $6,000 to $12,000. The company lost service bids on $8.5 million worth of work last year where price was cited as the reason, Jim Ziegler, general manager of Bombardier Business Aviation Services, told the Wichita Eagle. Those lost bids equal about 34 jobs, he said.

Thirty-five states already exempt aircraft maintenance to some extent, including all of Kansas' neighboring states, according to the Kansas Chamber of Commerce and Industry. However, only half a dozen exempt both labor and parts on repairs and maintenance, as Goico's measure does. The current sales tax puts Wichita at a competitive disadvantage. According to the Kansas Department of Revenue, the state would lose about $1.3 million in tax collections if the exemption becomes law. Supporters, however, say new jobs will generate more income, sales and property taxes for the state.

"We're trying to get some of the unemployed aircraft workers employed. A lot of these guys have already run out of unemployment," said Goico, an engineer who has been laid off twice in his own aircraft career.

FMI: www.kslegislature.org