Beware the backdoor tax on passengers

The Washington media loves shiny objects. Whether it’s the latest political tweetstorm, or the big, defining legislative fights like health care and tax reform, the press will pounce and keep its claws in the story. Smart politicians and Washington insiders are wise to this tactic, and the sharpest among them will often seize the opportunity to insert controversial provisions in legislation that would otherwise fail to pass muster in the arena of public opinion.

It should therefore come as little surprise that Maine’s senior senator, Susan Collins, recently exercised her power as an appropriator to advance what amounts to a tax hike: one that will, if enacted, raise the cost of flying for millions of travelers in every corner of the country. The proposed language would nearly double the maximum federal Passenger Facility Charge (PFC) – one of the many government mandated taxes you pay when you purchase a plane ticket – from $4.50 to $8.50. 

{mosads}This is a bread and butter issue for most Americans, one that adds up quickly even with restrictions on how many parts of trip are subject to PFCs. If this scheme becomes law, it will mean that an average family of four could shell out $104 in combined PFCs on the round-trip tickets they purchase. And that’s just one of the 17 taxes the government collects on commercial aviation tickets. Increase this burden, and the whole aviation ecosystem – including, ironically, airports – will suffer because price-sensitive consumers will choose to stay home or find a substitute mode of transportation.

The PFC tax goes to fund airport improvement projects. Everyone agrees that airports constitute vital national infrastructure and that it’s in everyone’s interest to have terminals and runways that are not only safe but run efficiently. 

But that’s not the whole story. Those backing this obscure provision fail to mention that airports are already sitting on a great deal of money. In fact, they have nearly $6 billion in unused reserve funds in the FAA’s trust fund (the highest level in two decades) and another $14.2 billion in unrestricted cash and investments. Further, this doesn’t count all the money airports bring in on things like parking fees, concessions and local tax revenue.

In the past, increasing the PFC has been sold as a way of giving airports more local control over their finances, and to their credit some proposals have called for reducing costly federal grants to airports in exchange for this flexibility. But this latest PFC hike raises the total government burden of paying for airports rather than shifts it.

In any case, true “local control” – and the accountability that goes with it – would mean that if the airports are so eager to have this tax, they could collect the PFC themselves. Instead, they are a pushing a proposal that would bury it in the cost of the tickets we buy, hoping that nobody will notice or that the airlines will get blamed for increasing fares. No wonder the typical airline ticket now carries with it a tax and fee load of 21 percent. 

Others have argued that the permissible PFC charge amount on each ticket hasn’t been raised in 15 years, and so the value to airports has been eaten away by inflation. Yet, when looking at overall collections, government data shows that overall PFC receipts have still managed to climb 94.9 percent between 2000 and 2015. This trend is almost twice as fast as the rise in the Consumer Price Index.

Had this PFC hike gone through “regular order,” that is, been debated in the relevant congressional committees with public hearings and input from experts, it would have been dead on arrival. After all, a recent poll of 1,992 voters found that 74 percent of Democrats, 76 percent of Republicans and 82 percent of Independents were flatly opposed to this airport tax increase. Only powerful behind-the-scenes lobbying can maneuver around that kind of bipartisan concern. 

Holiday travel plans are tough enough for America’s families without being forced to shoulder an even bigger government burden on their airline tickets. It’s time for taxpaying travelers to their lawmakers that this latest attempt to lighten our wallets won’t fly.

Pete Sepp is President of National Taxpayers Union (ntu.org), a nonpartisan citizen group founded in 1969 to work for fairer, less burdensome taxes and limited government.