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Aviation Taxes and Fees: Major Issues, May 9, 2003 1 (May 9, 2003)

handle is hein.tera/crstax0024 and id is 1 raw text is: Order Code RS21321 Updated May 9, 2003 CRS Report for Congress Received through the CRS Web Aviation Taxes and Fees: Major Issues John W. Fischer Specialist in Transportation Resources, Science, and Industry Division Summary The existing federal aviation tax structure is primarily a user fee based system that has developed over the last 30 plus years. Prior to September 11, aviation taxes and fees, while not popular with the airline industry, were not regarded by most as a major policy issue. This situation has now changed, especially as a result of new security based fees imposed in the fall of 2001. Given the airline industry's continuing financial problems, the industry is now asking Congress for some form of tax relief. The industry believes that such an action can be justified in light of the large security costs imposed on aviation as a result of the events of September 11. With passage of P.L. 108-11, Emergency Wartime Supplemental Appropriations for FY2003, the industry has been granted a four month suspension of the aviation security fee beginning June 1, 2003. This report provides an overview of the existing aviation tax structure and provides a brief discussion of some of the issues associated with it. This report will be updated as warranted by events. There are a wide range of federal taxes and fees imposed on the airline industry, almost all of which are statutorily linked to federal aviation programs. The tax and fee structure, shown in Table 1, has evolved over time. The passenger security fee, which was imposed beginning in 2002, is the newest fee. Passenger Facility Charges (PFCs) originated in 1990 and were modified more recently. Many of the airport and airway trust fund related fees originated along with the trust fund in the 1970s. Immigration, Customs, and Agricultural inspection fees in some form predate the aviation specific taxes and fees discussed in this report.' A few of the fees discussed here have broad application that goes well beyond aviation. The Customs Service, Immigration and Naturalization Service (INS), and the Animal and Plant Health Inspection Service (APHIS) all provide extensive services related to other modes of transportation. Some of the Immigration, Customs, and Agricultural fees are linked to the cost of providing inspections services. That is, the fee 1 For the purposes of this report the discussion focuses on federal activities that have an aviation related tax or fee. Programs such as aeronautical research provided by NASA, funded entirely by U.S. Treasury General Funds, are therefore outside the framework of this discussion. Congressional Research Service ** The Library of Congress

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