Taxes On Aviation Becoming A Huge Problem

Aircraft owners in Washington state are facing a new tax that could add hundreds or even thousands of dollars a year to their fixed costs.

But they aren't alone, taxes have become an issue around the country, according to the National Business Aircraft Association.

Washington State Sen. Cheryl Pflug told the Washington Pilots Association that a citizens' commission on tax preferences has recommended a one percent yearly excise tax based on the value of an aircraft. Therefore, an aircraft worth $100,000 would be taxed $1,000.

Pflug told the association that the commission views the tax as a "revenue opportunity" and is recommending the state legislature impose it. She urged the WPA to give her ammunition to fight the proposed tax in the form of economic impact analysis and the volunteer efforts of pilots in maintaining state-owned airports, according to the website AvWeb.

WPA spokesman John Townsley said that aircraft owners now pay a flat annual registration fee ($65 for a piston single) and that the proposed tax wouldn't benefit aviation.

"Currently state aircraft registration fees and excise taxes collected for aircraft go to the general fund and are not reinvested in airport infrastructure," told the website. He also noted that aviation fuel is the only fuel that has sales tax added and that those taxes also go into the general fund.

He noted that there are 138 airport projects pending that have not been funded. The NBAA noted that the State of Washington's Department of Revenue (DOR) has taken the position that personal property tax is due on a percentage of the entire fleet of each Part 135 operator that flies into or out of Washington.

The tax is based on the value of the fleet and apportioned based on the charter operator's aircraft usage in Washington. The DOR has had the statutory authority, at least from a state tax perspective, to levy this tax for some time, but only recently actively enforced this law against taxpayers who did not have a substantial presence in Washington.

In San Diego County, private aircraft are taxed based on their age, condition, avionics and upgrades. Owners are polled each year with a form to sign detailing what, if any, changes have been made, particularly any improvements, new equipment (there's a detailed list) and aircraft usage.

Owners are sent a personal property tax bill later in the year.

Aviation taxes are an issue around the country, as well.

MORE DETAILS IN THE MARCH ISSUE OF PACIFIC FLYER.