Tax cuts and reform for air travelers

The Congress Blog has hosted two well thought out pieces on the Passenger Facility Charge (PFC), the fee charged by local airports for infrastructure improvements.  Congress is going to debate the Federal Aviation Administration (FAA) authorization bill this summer and the bill should lower cost for travelers while allowing local airports to improve crumbling infrastructure.

Marc Scribner, fellow at the Competitive Enterprise Institute, made “The Conservative Case for a modernized Passenger Facility Charge.”   Scribner argues that the PFC is a user fee and as such “Congress should do the right thing and raise the cap on the PFC.” Scribner worries that if Congress does not raise the PFC cap from $4.50 per ticket, then Congress will shift cost by raising one or more of the taxes on air travel tickets to pay for airports upgrades.  Raising ticket taxes will allow even more taxpayers money to flow to Washington, instead of letting the local airports to raise the PFC user fee.  Federally funded airport improvements are an inferior outcome then letting the local airport keep a bit more money in the form of a higher PFC.

{mosads}Grover Norquist, President of Americans for Tax Reform, in a coauthored piece argues “PFC increase is bad for consumers and the economy.”  Norquist makes the case, “fully 21 percent of the average ticket price goes to federal taxes and fees.  Even with billions in expected revenue, some in Washington D.C. are proposing to increase certain federal fees on air travel by 90 percent, because the FAA and airports want more money.  Taxpayers/Travellers should say ‘no.” It is true that travelers are already burdened too much with very high bag fees and federal taxes on tickets.  Higher ticket prices would be a bad outcome if this debate on FAA authorization.

The U.S. Travel Association has found a way to thread the needle to make both these interests in the center-right movement happy.  Furthermore, if this idea is implemented, it will lower costs for consumers in a way that will make all Americans very happy when they buy a ticket to fly no matter what party they support.

The U.S. Travel Association has released a plan that would eliminate five passenger aviation taxes.  The biggest tax reduction for air travel would be an elimination of the Domestic Passenger Ticket Tax, 7.5% for domestic flights, would be eliminated.  Local airports would be allowed to adjust their PFC from $4.50 to $8.50 and adjust cap for inflation. 

U.S. Travel proposes to cut the overall amount that travelers pay for the average ticket while letting the local airports keep more money.  Shifting the revenue structure from one that makes the federal government the centerpiece of local airport renewal to allowing the airports to keep more money collected for tickets as a means to upgrade airports is an overdue idea.

Now it is up to Congress to implement these ideas to help consumers and provide stimulus to the important travel sector of the economy.

Langer is president of the Institute for Liberty, a conservative public policy advocacy organization.