N.H. lawmakers: Don’t raise the aviation fuel tax, Americans for Tax Reform says

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New Hampshire lawmakers, seemingly to make up for the fewer general aviation aircraft owners that their state has lost to neighboring Massachusetts — which doesn’t tax aircraft and plane sales — have been trying since the year started to move House Bill 124 forward.

Specifically, HB 124 would repeal all aircraft registration fees collected by the New Hampshire Department of Transportation. Of the total fee revenue, 75 percent is earmarked for the state’s general fund, while 25 percent is credited to the state’s aeronautical fund. New Hampshire’s aeronautical fund revenue then gets distributed to local public-use airports, some of them municipally owned, for maintenance, operations and capital improvements, according to the text of the bill.

The state House has voted to retain HB 124, and in September, a subcommittee of the New Hampshire House Ways and Means Committee twice considered proposals for replacing the estimated $1 million in revenue generated by HB 124’s repealed aircraft registration fees, which are based on the cost of an airplane.

Of the two proposals suggested last month, one is based on weight; the other would retain the current registration and weight fees, but replace the state’s millage rate with an increased jet fuel tax.

The latter suggestion is problematic, Americans for Tax Reform (ATR) says.

“Businesses don’t pay taxes, people do, and the cost of the proposed jet fuel tax increase will be borne by individuals, families and employers in the form of higher costs for airfare, as well as higher prices for goods shipped by air,” ATR President Grover Norquist wrote in an Oct. 16 letter to members of the state House Ways & Means Committee.

“After being hit with 20 federal Obamacare tax increases over the last eight years, the last thing your constituents need is to have lawmakers in Concord pile on with further tax hikes at the state level,” wrote Norquist, who urged state House members to reject the aviation fuel tax hike proposal.

In fact, Norquist said, there’s widespread agreement across the political and ideological spectrum that the cost of the corporate income tax negatively impacts individuals in the form of lower wages, higher costs for goods and services, and reduced job opportunities.

“The same dynamic applies with jet fuel taxes. Like the federal corporate tax, the cost of New Hampshire’s jet fuel tax is borne by individuals and families,” according to his letter, which was made available to Transportation Today.

Additionally, ATR points out that having a jet fuel tax to begin with is dubious.

“That’s because jet fuel is a business input and business inputs should be exempt from taxation,” Norquist wrote.

According to ATR, exempting business inputs from taxation is about preventing tax pyramiding, which occurs when taxes pile upon other taxes as products move through the supply chain, resulting in higher costs for the final product or service. That’s reason enough alone for New Hampshire lawmakers to reject raising the jet fuel tax, Norquist said.

Patrick Gleason, ATR’s director of state affairs, also pointed out to Transportation Today that in filings with the Federal Aviation Administration, New Hampshire admitted that its tax on jet fuel isn’t in compliance with federal law.

“It’s hard to see how raising an already non-compliant tax is a good idea,” Norquist wrote.

For different reasons entirely, the Aircraft Owners and Pilots Association (AOPA), which represents general aviation pilots and aircraft owners, and which counts 2,000 members in New Hampshire, also opposes HB 124, specifically due to its “drastic negative effect on airport funding,” according to an AOPA memorandum of opposition filed with state lawmakers.

AOPA said the “overwhelming majority of New Hampshire’s publicly owned airports,” such as Concord, Lebanon and Laconia airports, depend on the kickback revenues generated by the aircraft registration fees, which AOPA says accounted for roughly 30 percent of all airport funding in the state through 2015 and 2016.

“Removing this much funding without a proposal to replace it, is a loss New Hampshire’s airports cannot afford,” says the group, which suggested two alternatives, including “a nominal increase on aviation fuel taxes, which are currently some of the lowest across the northeast.”

Said ATR’s Gleason: “This would be passed along to consumers in the form of higher ticket prices and that’s not going to work. That’s why we oppose House Bill 124.”

And work continues on HB 124, which was introduced Jan. 4 and is sponsored by six Republicans and three Democrats. The bill has been retained again twice this month; once during an Oct. 12 Ways and Means Committee subcommittee work session and then again on Tuesday during another subcommittee work session. The bill is now scheduled for an Oct. 25 House executive session, according to LegiScan.