Obama Budget Proposes An Additional $7.9 Billion In Annual Taxes On Airlines And Their Customers

Airlines for America (A4A), an industry trade organization for U.S. airlines, has issued a statement opposing the FY 2017 White House budget proposal, which would drive up the federal tax burden on airlines and their customers by an additional $7.9 billion per year, up from the more than $22.6 billion they pay today.

Currently, travelers pay $63 in federal taxes, or 21 percent of a $300 one-stop, round-trip domestic ticket. If the Administration’s proposed budget were passed, it would increase the federal tax amount to nearly $80, or 26.5 percent of the ticket price – an incredibly onerous and excessive burden on airline passengers. Revenues from airlines and their customers should not go towards deficit reduction or any other non-travel related expenses.

“U.S. airlines are vital to the health of our nation’s economy, and the flying public should not be asked to foot the bill for deficit reduction,” said A4A. “We urge Members of Congress to continue holding the line against unnecessary tax hikes that drive up the cost of travel for the 2 million passengers who fly on U.S. airlines every day.”

A nearly 35 percent increase in taxes on airlines and their customers is both unnecessary and will stifle the investment, growth and innovation while curbing demand, which harms our economy.

The FY2017 budget proposal doubles down on previous calls from the Administration for a nearly 80 percent increase of the Passenger Facility Charge, also known as the airport tax - which Congress has rightfully rejected. A4A noted its strong support for infrastructure improvements, but called the increase unnecessary because airports are in strong financial condition and continue to have ample funding resources without forcing passengers to pay more for simply using the airport.

“There simply is no crisis in airport funding and no justification to hike airport taxes on the traveling public,” A4A added.

The White House budget also proposes to:

• Increase the security tax from $5.60 per one-way trip to $6.60 in 2017, and incrementally increase it annually from 2018 to 2020 when it reaches $7.50 per passenger. On average, this will cost passengers and airlines $1.2 billion annually.
• Reinstate the TSA Aviation Security Infrastructure Fee (ASIF) at its previous level of $420 million annually.
• Increase the customs tax from $5.50 to $7.50 and the immigration tax from $7 to $9, costing $430 million annually.
• An $8 PFC will raise an incremental $2.3 billion.
• The $10/barrel oil tax translates into a 23.8 cents per gallon fuel tax and will raise an estimated $3.5 billion.

(Source: A4A news release)

FMI: www.airlines.org