New Proposals Seen As Harmful To General And Biz Aviation

National Business Aviation Association President and CEO Ed Bolen urged organization members Monday to contact their congressional representatives and voice their opposition to two proposals that could, according to NBAA, potentially prove very harmful to the aviation industry.

The provisions -- included in the Senate version of the "Tax Relief Act of 2005," a spending "reconciliation" bill approved last week -- would expand limitations on entertainment use of business aircraft to all employees, rather than just senior executives. A second, broader provision, if approved, would substantially increase taxes for some uses of a company aircraft.

Congress is expected to begin debate on the measure in approximately two weeks, after representatives return from the holiday break. NBAA's Bolen is encouraging the organization's members to tell Congress how they feel, and the association has set up a special link on their homepage for concerned operators to use to send comments to Congress.

"NBAA's Members are critical to communicating the industry's views with Congress," Bolen (pictured below) said.

"I urge all of our Members to voice their concerns about these proposals with their members of Congress."

At first blush, perhaps, the change in wording isn't of much concern. After all, tales of abuses of corporate aircraft are about as old as the concept of corporate aircraft in the first place. Images of CEOs travelling to the Bahamas onboard Gulfstreams paid for their workers and investors have been on the minds of Americans since, at least, the Enron scandal.

The Advocate Aircraft Taxation Company -- a business that assists aircraft owners and operators in acquiring, maintaining, and disposing of aircraft in a tax efficient manner consistent with the FARs -- points out that the provision doesn't include high-level executives, however, but ALL employees.

Moreover, as the provisions are written the legislation would apply to any corporate-owned aircraft, from a lowly Cessna 172 up to a Citation X. While the legislation would help curb Enron-esque "outrageous" uses of corporate aircraft, it would also tax incidental use of such planes -- at least most, if not all, of which is completely justifiable.

The provisions would also require an employer compute at year's end the value of an employee's use of a company aircraft, including both fixed and variable costs, and include those expenses on the employee's payroll as income -- so the employee can then be taxed.

This, according to AATC, conflicts with Federal Aviation Regulations that generally prohibit employers from seeking reimbursement for flight expenses from an employee.

FMI: www.nbaa.org