[Congressional Record Volume 141, Number 21 (Thursday, February 2, 1995)]
[Senate]
[Pages S2070-S2071]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         ADDITIONAL STATEMENTS

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                 COMMERCIAL AVIATION FUEL TAX EXEMPTION

 Mr. SANTORUM. Mr. President, I am pleased to introduce a bill 
with Senator Gorton, Senator Bryan, and others to repeal the commercial 
aviation fuel tax, and I am proud that this is the first piece of 
legislation I am introducing as a U.S. Senator. As I traveled 
throughout all of Pennsylvania's 67 counties this past year, it was 
clear that the threat to jobs and industry from this upcoming tax 
required immediate attention. In keeping with my promise to 
Pennsylvanians, I am confident that this will remove an obstacle to the 
recovery of an industry critical to Pennsylvania's economy.
  This tax, which will take effect on October 1, 1995, will force the 
troubled airline industry to assume another massive financial burden. 
The Omnibus Budget Reconciliation Act of 1993 imposed a new 4.3 cents 
per gallon tax on commercial aviation fuel. At the time, the airline 
industry was experiencing deep financial difficulties, so the act 
granted a 2-year waiver on the imposition of this tax. Clearly, the 
industry has yet to recover, and a tax costing $527 million annually 
will have a devastating effect on service providers, airline 
manufacturers, and other related employers. More layoffs, increased 
ticket prices, and greater deterioration of consumer confidence in our 
Nation's airlines is not the goal of a responsible Congress.
  Historically, the airline industry has been assessed excise and cargo 
taxes in lieu of a fuel tax. These alternate taxes amount to $5.4 
billion annually. In addition, since 1990, the industry has lost $12.8 
billion, nearly 120,000 employees have lost their jobs, and tens of 
thousands of airline manufacturing employees have been laid off. For a 
troubled industry which pays more than its fair share of taxes, I 
believe it is our responsibility to repeal this excessive and 
potentially destructive tax.
  Last Autumn, 59 Senators and 4 future Senators, myself included, 
wrote to President Clinton seeking relief from this tax. This Congress, 
I am proud to report a groundswell of support amongst Republicans and 
Democrats in both the Senate and the House of Representatives. I hope 
this support continues unabated as we proceed to final passage of a 
repeal which is needed and in the best interests of our Nation's 
airline laborers, service employees, and the industry as a whole.
 Mr. GORTON. Mr. President, I am pleased to join with Senator 
Santorum, Senator Bryan, and others in introducing a bill to repeal the 
fuel tax on commercial aviation. The effect of this bill will be simply 
to disallow the 4.3 cents per gallon fuel tax from going into effect on 
October 1, 1995. Two years ago, Congress correctly recognized that the 
airlines had undergone tremendous financial difficulties and that 
imposing another new tax upon this beleaguered industry made no sense--
this remains true today.
  The airline industry has lost approximately $12 billion in the last 4 
years. The industry is aggressively trying to turn this picture around 
and is just now beginning to show some signs of success. In the last 
several years, the industry has had to resort to massive layoffs, wage 
and benefit concessions, route reductions, and substantial cuts in 
capital spending. Six of the largest airlines have caneled or deferred 
orders for 647 aircraft totaling $38 billion. Tens of thousands of 
airline and aircraft manufacturing employees have lost their jobs. 
Boeing's employment alone has dropped by 43,000 in the last 5 years due 
to a substantial decline in both the commercial and the defense 
business. Three major air carriers--United, Northwest, and TWA--have 
transferred substantial amounts of ownership to company employees in 
exchange for wage and benefit concessions.
  In order to meet stage 3 aircraft noise requirements, it is estimated 
that the industry will spend $7 to $8 billion a year during the 
remainder of this decade. The industry cannot afford to add an 
additional $527 million a year in new taxes--this on top of the many 
taxes it is already paying. Most people, I believe, would be shocked to 
learn that the industry pays over $5.4 billion annually in excise taxes 
and fees, the equivalent to a 45.82 cents per gallon fuel tax.
  Last year I was proud to serve on the National Airline Commission. In 
our report, we discussed the proposed fuel tax and other burdensome 
taxes placed upon the industry. It was our collective conclusion that, 
``there are several tax provisions that impede the ability of the 
industry to return to financial 
[[Page S2071]] health. We believe those provisions violate reasonable 
principles of common sense and good public policy.'' I hope the 
Congress will join with us in rejecting burdensome new taxes on this 
important industry and will support the enactment of this 
legislation.


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