[Congressional Record Volume 141, Number 168 (Friday, October 27, 1995)]
[Senate]
[Pages S16156-S16157]
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, on January 31, 1995, I introduced 
my first bill as a U.S. Senator, S. 3004, the Commercial Aviation Fuel 
Tax Repeal Act. We are now on the verge of passing a budget which, for 
the first time in 26 years, will balance the Federal budget and 
eliminate the Federal deficit. I am proud to note that S. 304 has been 
incorporated to a great extent into this historic budget. As a result, 
I wish to take this time to mention the thousands of workers and the 
many unions and business professionals who have provided consistent 
support for this crucial piece of legislation.
  First, I wish to submit for the record a resolution as passed by the 
National Aerospace Workforce Coalition. Throughout the debate on the 
aviation fuel tax issue, I worked closely with the National Aerospace 
Workforce Coalition. This organization consists of local unions and 
workforce associations. The coalition represents some 42 different 
unions in 29 States. Many of my colleagues have received letters and 
phone calls from coalition members in their States. The coalition 
believes, as I do, that a commercial aviation fuel tax will be 
extremely harmful to America's manufacturing base.
  The resolution which I have submitted goes to the heart of the 
relationship between a tax on jet fuel and commercial aircraft orders, 
namely, that every increase in taxes on commercial jet fuel will be 
followed by more cancellations and deferred orders of American made 
engines and aircraft.
  The labor unions supporting the repeal of this fuel tax include the 
spectrum of America's aerospace industrial base. This resolution has 
been passed by unions representing scientists and engineers, production 
workers, as well as unions engaged in casting and fabricating the 
specialized metals used in the production of modern aircraft.
  Further, I wish to note that the International Association of 
Machinist and Aerospace Workers, District Lodge 141 passed a similarly 
worded resolution on October 24, 1995. This union represents 34,000 
members at 13 airlines, and their delegates unanimously passed this 
resolution at their annual convention.
  The balanced budget which the Senate will pass shortly relieves the 
airline industry from any unfair tax, but only for a limited time. 
Currently, the House of Representatives has extended the aviation fuel 
tax exemption for 2 years and the Senate shall extend it for only 17 
months. I am pleased that in these difficult budgetary times both 
Chambers have recognized not only the unfairness of this unprecedented 
tax, but the critical need to avoid further hindering a struggling 
industry. However, absent outright repeal, I strongly believe that any 
extension of the exemption must run for at least 2 years. I will work 
hard during the House-Senate conference on the budget to ensure that 
the extension extends for at least this long. Further, it is critical 
for the Congress to address broader taxation and fee issues with 
respect to the airline industry during the next session of the 104th 
Congress. I will work to hold hearings on this issue in the spring of 
1996.
  The reasons for at least a 2-year extension are clear. U.S. airlines 
have lost money every year since 1990, with losses for the period 
totaling almost $13 billion. Almost one-half of all major U.S. airlines 
have filed for chapter 11 bankruptcy protection during the crisis, 
including America West, Continental, twice, TWA, twice, Eastern, Pan 
Am, and Midway. The last three have ceased operations altogether. 
Cumulative industry debt since 1990 has increased from $9 billion to 
$46 billion, and the bonds of all major U.S. airlines are rated as junk 
bonds. Airlines are facing Government-mandated fleet replacement costs 
to upgrade fleets to quiet technology aircraft that will exceed $15 
billion a year through the rest of the decade. Imposing a fuel tax now, 
at a cost of $527 million a year, would wreak havoc on an industry 
struggling to survive.
  In addition, the airline industry has historically paid excise and 
cargo fees in lieu of any fuel tax. These fees will exceed $6.9 billion 
in 1995. Imposing a fuel tax absent any broader effort at reassessing 
these other taxes would be both unprecedented and unfair.
  Hence, for both fiscal and fairness reasons, an extension of the 
aviation fuel tax exemption is greatly needed. While we in the Senate 
have taken steps in the right direction by incorporating S. 304, in 
part, into this year's budget act, we must continue to ensure that the 
airline industry is taxed fairly. This industry is one of our Nation's 
last great manufacturing gains, and its tens of thousands of workers 
deserve the right to continue to uphold America's predominance in this 
critical industry.
  I ask that the National Aerospace Workforce Coalition resolution 
referred to earlier be printed in the Record.
  The resolution follows:

                      Aviation Fuel Tax Resolution

       Whereas our country's airline industry has suffered 
     enormous losses over the last five years, reducing airline 
     employment by more than 120,000 workers and forcing remaining 
     workers to accept reductions in wages and benefits;
       Whereas several years ago government mandates required the 
     airline companies to pay excise taxes and fees in lieu of a 
     fuel tax, which today collectively amounts to more than 52 
     cents per gallon of fuel and places our nation's airline 
     companies at a competitive disadvantage;
       Whereas there is a direct relationship between a healthy 
     airline industry and a healthy aerospace industry, and that 
     only profitable airlines can modernize their fleets with 
     American-built engines and aircraft to help revive an 
     aerospace industry already devastated by drastic cuts in 
     defense; 

[[Page S 16157]]

       Whereas over 1,000 commercial aircraft orders have been 
     canceled or deferred in the past five years, because of 
     losses in the airline industry resulting in a cost of 125,000 
     airframe and aerospace jobs;
       Whereas every increase in taxes on commercial airline fuel 
     will be followed by more cancellations and deferred orders of 
     American-made aircraft;
       Therefore the National Aerospace Workforce Coalition urges 
     the Senate to repeal the aviation fuel tax as it will only 
     cause more hardship for American workers and further erode 
     our country's aerospace industrial base.

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