5x Increase in Jet Fuel Tax (Rightfully) Pops Eyeballs at NATA

The NATA (National Air Transportation Association) is unhappy with some of the general aviation tax provisions published in the White House's FY2025 Budget -- as they should be.

The group put out a statement regarding President Biden's budget plans, pointing out the beneficial effects of general aviation on the economic landscape. The most distressing aspect of the change would be an increase to the jet fuel tax, which would add up to a 500% increase over a 5-year ramp-up span. Looking back, NATA even checked on a similar change in the past, when a tax shift removed billions of dollars from the Airport and Airways Trust Fund to the Highway Trust Fund. Even one small change ultimately carved away billions of dollars from airfield upkeep and improvement across the country since that change went into power - a fivefold increase in gas tax would be far more destabilizing to the funding.

“Business aviation is in the crosshairs again at a time when it is needed the most,” said NATA President and CEO Curt Castagna. “The White House budget includes multiple provisions that mischaracterize the value of and would adversely affect the business and general aviation sectors, jeopardizing the jobs they provide and disregarding the critical services they support.”

“During last week’s State of the Union address, President Biden spoke passionately about our country’s freedom, future possibilities, and job growth—all attributes fostered by our essential industry. Rather than singling out general aviation, the Administration’s first priority should be creating and preserving an environment in which aviation continues to facilitate business growth and contributes to the national economy,” added Castagna. 

“NATA opposes such an increase in fuel taxes for these private, noncommercial operators. In addition, we are concerned that the Biden Administration is failing to account for the billions of business aviation tax dollars that are diverted from the Airport and Airways Trust Fund (AATF) into the Highway Trust Fund (HTF). Such diversion weakens the National Airspace System and could place the safety of the industry at risk. 
 
“Unfortunately, the Biden Administration is proposing a tax increase it mistakenly believes will benefit the national aviation system. This is not the case. For nearly two decades now, Congress and the IRS have failed to address provisions in the tax code that allow for the HTF to erroneously keep billions of aviation tax dollars that were intended for the AATF,” added Castagna. 

In 2016, the GAO released a report on the impact of diversions of non-commercial jet fuel tax revenues from the AATF to the HTF. The report concluded the diversion of funds stemming from a 2005 change in tax law resulted in a loss to the aviation fund of between one and two billion dollars intended for airport improvements and system modernization. The diversion has continued since the 2016 report, costing the Airport and Airways Trust Fund billions of dollars. 

“Should the Biden Administration seek to have a meaningful increase in funding to the AATF, fixing the multi-billion dollar diversion to the HTF is where we suggest they begin,” concluded Castagna.

FMI: www.nata.aero