User Fees Cut Biz-Tax Burden

<H1>User Fees Cut Biz-Tax Burden</H1> Last week, a historic event happened in the airline industry: The CEOs of the seven largest airlines actually agreed on a new formula for a short-term replacement for the excise tax. Last Dec. 31, the excise tax lapsed as part of political bickering between the two political parties. Since then, no new money has gone into the aviation trust fund.

This is historic because now a mechanism is in place that will help in the long-overdue reform of the Federal Aviation Administration. The FAA's inability to improve the nation's air traffic control system has been the main cause of delays in travel that have cost business travelers money, both in terms of inconvenience and higher ticket prices due to increased operating costs at the airlines. Financial reform is the necessary first step toward bringing responsibility to the FAA. The new user fee also removes the aviation trust fund from the political process so we cannot be held hostage to an unfriendly political environment.

The FAA is a political hostage to the excise tax. Those who long for the return of the tax have ignored all issues relating to FAA reform. Furthermore, in all countries where a user fee has been implemented, both the user fees and delays have gone down over time. There are 15 countries where user fees are in place, and in each case the aviation infrastructure improved.

The United States is the only country in the world where those who are in charge of safety also have a dual role in promoting the industry. I personally do not feel safer because the FAA and the Department of Transportation work together. The recent ValuJet crash brings to the front the obvious conflict of interests between these organizations. Safety should be the FAA's number-one concern, but it is not. The overwhelming need to reform FAA is just one consideration in changing from excise taxes.

Business travelers will see their prices go down because the current excise tax is regressive: It makes those who pay higher fares pay the most for using the air traffic control system. Few travelers realize it, but their excise taxes are the main source of air traffic control funding. Those who pay higher fares pay the largest amount of taxes, even though it costs the FAA the same amount to fly them through the system.

Once we change to user fees, the FAA will realize it serves the flying public. In the past 15 years, it spent more than $17 billion to improve air traffic control without even one benefit to the public.

The user fees lower the taxes paid by almost every single business traveler in the United States. Those who will see increases will be those flying the low-cost airlines. These people would see their prices go up in the range of $2 to $4 per person. We know from the experience of passenger facility charges that this will not cause traffic to go down at these airlines. When these charges were put in place, traffic continued to grow. In other words, low-cost carriers will not be affected at all from a change in how taxes are paid. On the other hand, nearly every business traveler will pay less. If your travelers pay one penny more than $69 for a round-trip ticket, your corporation will be better off. The difference in ticket price will range from a few dollars to at least $20.

At the margin, the low-cost carriers' traffic will not be hurt, and all other travelers will see their taxes go down. This is a win-win situation. At the same time, the amount of money going into the trust fund will stay the same. This shows how lopsided the previous system was, as only 5 percent of the travelers paid over 25 percent of the money going into the aviation trust fund. The 5 percent that paid for the system were travelers from your corporation.