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Lawmakers extend aviation taxes through July 15

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Tax Hot Topics: Aviation taxes extendedThe president has signed into law a short-term Federal Aviation Administration (FAA) reauthorization (H.R. 4721) that extends aviation fuel and ticket taxes through July 15, 2016.

The brief extension will force Congress to revisit the issue again soon. House Republicans are pushing a broader reform bill that would replace aviation taxes with user fees and scrap the FAA in favor of a private nonprofit organization. Senate Democrats are trying to use the bill as a vehicle to extend many of the energy tax provisions that were not included in the December tax bill.

House Republicans have failed on FAA privatization in the past and were willing to concede and extend the taxes until next March. Senate Democrats rejected the offer and insisted on forcing another bill in July so that they would have another opportunity to use an FAA bill as a vehicle for energy tax issues. The maneuver is another indication that little, if any, tax legislation is expected in 2016.

The extensions in H.R. 4721 cover the following taxes:
  • 19.3-cents-per-gallon excise tax rate on noncommercial aviation gasoline
  • 21.8-cents-per-gallon excise tax rate on noncommercial aviation kerosene
  • 7.5% tax on the base ticket price
  • $4.00-per-person domestic segment tax for a single takeoff and landing (indexed for inflation)
  • $17.80-per-person international travel facilities tax for flights that begin or end in the United States ($8.90 for a flight that begins or ends in Alaska or Hawaii) (indexed for inflation)
  • 6.25% tax on the amount paid for transporting property by air

Without the extension, the excise tax rates on noncommercial aviation fuels would be reduced to the 4.3-cents-per-gallon rate imposed on commercial airline fuel. The other taxes would simply expire.

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