Principato: Law Would Turn Airports Into Tax Collectors

In testimony submitted to the House Small Business Committee's Subcommittee on Contracting and Workforce, Airports Council International-North America president Greg Principato (pictured) stressed that the preparation for and implementation of the law will carry significant administrative and financial burdens at a time when airports are facing dramatic cuts in federal funding.

The commmittee has proposed a 3% withholding of government payments for products and services, required under Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222). In his testimony, Principato stated that airports are too often subjected to these types of financial burdens and, "as an industry we already pay higher debt services costs on bonds issued for large scale projects.  With over 50% of airport improvements financed with debt, the loans issued for the majority of those projects, known as private activity bonds (PABs), carry an Alternative Minimum Tax (AMT) penalty. This penalty has resulted in higher construction costs, sometimes reaching tens of millions of dollars, which ultimately must be passed along in higher costs for business and leisure travelers."

Additionally, Principato stressed that the federal government should not put airports in the position of collecting federal taxes or enforcing federal tax laws.  "The 3% withholding regulation will put our industry in the position of not only playing our current role as landlord but we will also be forced to play the role of tax collector."
 
"We ask that you work to repeal the 3% withholding regulation," Principato urged. "The impact the regulation will have on airports, airport contractors, airport subcontractors, small businesses that serve airports, and ultimately our local communities will be costly and burdensome."

FMI: www.aci-na.org