[Congressional Record Volume 142, Number 43 (Tuesday, March 26, 1996)]
[Extensions of Remarks]
[Pages E454-E456]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         AVIATION TAX SCHEDULE

                                 ______


                           HON. JIM LIGHTFOOT

                                of iowa

                    in the house of representatives

                        Tuesday, March 26, 1996

  Mr. LIGHTFOOT. Mr. Speaker, the administration has proposed as part 
of its fiscal year 1997 budget request that Congress give the Federal 
Aviation Administration [FAA] the unlimited authority to establish and 
raise new aviation taxes. Under the administration proposal, the FAA 
could establish and implement those new taxes not later than 60 days 
after enactment. Following my statement is the aviation tax schedule 
developed by FAA in support of its budget request. Space limitations 
prevent us from adding the complete document into the Record today. 
However, the full FAA document is readily available from my office.
  This new aviation tax schedule is clearly a case of the ``devil is in 
the details.'' The administration, in its publication ``FAA fiscal year 
1997 Budget in Brief,'' attempts to portray these aviation taxes as 
limited to $150 million. However, the legislative language submitted to 
Congress, coupled with the information I am sharing with this House 
today, tells another story.
  The legislative language submitted to Congress does not actually 
limit the amount collected in aviation taxes, it merely limits the 
amount available for obligation in fiscal year 1997 to $150 million. As 
we see in the attached aviation tax schedule entitled, ``Illustrative 
User Fees and Aviation Regulation and Certification,'' the 
administration clearly has bigger things in mind. This aviation tax 
plan could raise as much as $345 million in fiscal year 1997. Who knows 
what designs the administration would have on the almost $200 million 
in unobligated new tax funds the FAA could collect in fiscal year 1997.
  At this point let me briefly highlight a few of Secretary Pena's 
proposed new aviation taxes.
  At least $122 million could come from the airlines in the form of 
aircraft registration fees, air operator certificate fees and 
manufacturers certification fees. An additional $57 million could come 
from general aviation in the form of new license and medical 
certification fees. I am sure other parts of the aviation community 
will be interested to see what the administration believes should be 
their share of the new aviation taxes.
  Mr. Speaker, this proposal is even worse than the original McCain-
Pena proposal, S. 1239, because under this new administration proposal 
Congress would not have the opportunity to review any new aviation 
taxes before they were implemented. I hope Members of the other body 
who have supported S. 1239 will take a long, hard look at the 
administration's proposed aviation tax structure, because this is the 
future of aviation. This is what the administration would propose if 
Congress were to ever approve the McCain-Pena bill.
  This administration's creation of a phony aviation funding crisis 
demonstrates that it does not believe itself capable of, nor is it even 
willing to attempt, to live within the confines of a balanced Federal 
budget.
  We see today what the administration passes off as its vision of the 
future of aviation; not a modern, leaner, more efficient FAA--but new 
taxes to paper over the problems of an old, inefficient organization--
in other words--business as usual.
  It's interesting to note, Mr. Speaker, the administration continues 
to resist FAA reform. Two weeks ago the House passed the Duncan-
Lightfoot FAA reform legislation. The Secretary of Transportation 
threatens a presidential veto of our FAA reform legislation. In fact, 
earlier this year the Appropriations Committee had to direct the FAA to 
develop and implement a plan to reform its personnel and procurement 
procedures.
  Mr. Speaker, this plan for new aviation taxes goes to the heart of 
what the General Accounting Office has reported to us about the FAA. 
There is an organizational culture problem at FAA that I believe can 
only be fixed with continued congressional insistence on personnel 
reform, procurement reform and, of course, the restoration of FAA to 
independent agency status.
  I think it is vital the Congress, the aviation community and the 
traveling public, which will ultimately pay these new taxes, have the 
opportunity to see the fine print whenever this administration proposes 
new aviation taxes. You can be sure this misguided tax proposal will 
face serious congressional scrutiny, particularly from the House 
Transportation Appropriations Subcommittee.

    Illustrative User Fees for Aviation Regulation and Certification

       Presently the FAA charges fees for foreign repair stations 
     and fees to recover the costs of the Civil Aviation Registry 
     for processing and issuing aircraft registration 
     certificates, dealers' aircraft certificates, and special 
     registration numbers. Registry fees are nominal, for example, 
     registering an aircraft is a one-time fee of $5 and there is 
     no charge for airmen certification. Proposed new fees and 
     increases in existing fees which were authorized by the Drug 
     Enforcement Assistance Act of 1988 and which will take effect 
     in 1997 still will not recover indirect overhead costs, nor 
     will they compensate for FAA's costs to actually certify and 
     license aircraft, airmen, air operations, or air agencies. A 
     list of the types of Registry fees, how much is now charged 
     and how much will be charged beginning in 1997, is shown in 
     Exhibit No. 1, ``Civil Aviation Registry'' on the next page.
       The User Fee Task Group studies a number of possible 
     certification and licensing fees, which are listed below. A 
     brief description of each fee is provided in Appendix No. 2, 
     ``Synopsis of Illustrative User Fees--Certification, 
     Regulation, and Licensing.'' More detailed narratives on each 
     fee are available.

                        [In millions of dollars]

                                                       Projected annual
Illustrative fee:                                               revenue
  Aircraft Certification: Designee Appointments and Renewals........6.0
  Aircraft Certification: Design Certification, Production Approval, 
    and Airworthiness Certification................................10.0
  Aircraft Registration Fee.......................................250.0
  Airmen Certification/Registration (including Medical 
    Certification).................................................56.5
  Certification of Air Operators and Air Agencies..................11.6
  Civil Aviation Registry..........................................11.0
                                                             __________

      Total Projected Annual Revenue..............................345.1


       aircraft certification; designee appointments and renewals

       The FAA interviews and reviews the credentials and training 
     of individuals who seek appointments as engineering, 
     airworthiness, or inspection representatives. These 
     individuals benefit economically as designees of the FAA. 
     Therefore, a $1,000 fee for initial appointments and annual 
     renewals would not seem unreasonable and would probably add 
     an element of efficiency, as those designees who conduct 
     certifications infrequently would opt not to be appointed, 
     thereby reducing FAA's workload. Conversely, caution should 
     be exercised to not charge too high a fee, as this might 
     decrease the number of designees and also increase the FAA's 
     workload.

[[Page E455]]



                                          EXHIBIT NO. 1.--CIVIL AVIATION REGISTRY IMPACT OF FULL COST RECOVERY                                          
                                                                [In thousands of dollars]                                                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      Required                          
                                                                              Estimated     Proposed    Estimated       cost         Estimated annual   
                                                                Current fee     annual        fee         annual      recovery          collection      
                                                                              collection                collection      fee                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aircraft Registration Certificate (Non-Transport)\1\..........         5.00        210.0        32.00      1,344.0        45.03                  1,891.4
Aircraft Registration Certificate (Transport)\1\..............         5.00         11.0        17.00         37.4        45.03                     99.1
Aircraft Reregistration Certificate \2\.......................            0            0        17.00        408.0        45.03                  1,080.8
Airmen Certificate--New/Additional Ratings....................            0            0        14.00      2,240.0        18.21                  2,913.8
Dealer's Aircraft Certificate--Original \3\...................        10.00         13.0        22.00         28.6        27.90                     36.3
Dealer's Aircraft Certificate--Additional.....................         2.00          6.4         7.00         22.4        27.90                     89.3
Duplicate Aircraft Registration...............................         2.00          6.0         7.00         21.0        44.89                    134.7
Duplicate Airmen Certificate..................................         2.00         90.0         7.00        315.0        23.85                  1,073.4
Pilot Certificate--Reissued/Renewal \4\.......................            0            0        14.00        980.0        23.85                  1,669.8
Record Security Aircraft Parts Locations Engines & Props \5\..         5.00        129.0        17.00        436.6        26.90                    694.0
Record Security Interest \5\..................................         5.00        150.0        17.00        510.0        26.90                    807.0
Renewed Special Registration Number...........................        10.00         40.0        28.00        112.0        34.68                    138.7
Special Registration Number...................................        10.00        100.0        30.00        300.0        37.16                    371.6
                                                               -----------------------------------------------------------------------------------------
    Total.....................................................  ...........        755.4  ...........      6,757.0  ...........                 11,000.0
                                                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
Requiring Operating Funds, $11.0M.                                                                                                                      
\1\ This is the cost for the original aircraft registration.                                                                                            
\2\ This is the cost for the renewal of aircraft registration which must occur every TEN years.                                                         
\3\ These are currently renewed on an annual basis and will continue to be done that way.                                                               
\4\ This will be for the ID portion of pilots certificates which will need to be renewed every TEN years.                                               
\5\ The collections for these fees currently goes to the General Fund, not the Registry.                                                                

       FAA designates about 6,000 medical doctors, Airmen Medical 
     Examiners (AME's), to perform medical examinations to certify 
     the health of airmen. Typically, exams cost about $50-$75, 
     and on average, AMEs conduct 50-100 exams a year. Few AMEs 
     make a living from these exams and few would find it 
     worthwhile to continue their designations if a fee were to be 
     charged. Although not yet instituted, AMEs are to be charged 
     $200 to attend FAA mandated training.


 AIRCRAFT CERTIFICATION: DESIGN CERTIFICATION, PRODUCTION APPROVALS, & 
                      AIRWORTHINESS CERTIFICATION

       FAA engineers conduct extensive analyses, inspections, and 
     ground or flight tests to certify that an aircraft, engine, 
     propeller, or aircraft part complies with design standards. 
     FAA also approves manufacturers' request to produce and sell 
     aircraft replacement parts. Fees could be charged for the 
     initial certifications and for periodic renewals. While $10 
     million in annual revenue is projected for this user fee, 
     much work needs to be done to fine tune this forecast, and to 
     determine what types, and the amounts, of fees that could be 
     charged.


                       AIRCRAFT REGISTRATION FEE

       Presently, registering an aircraft is a one-time charge of 
     $5. Under current legislation this will increase to an 
     initial registration fee of $17 for commercial airlines and 
     some business jets, and $32 for all other aircraft. Every ten 
     years there will be a renewal registration fee of $17. The 
     proposed illustrative aircraft fee, comparable to an 
     automobile registration fee, could convert this fee to an 
     annual fee with an option to pay several years in advance, 
     and possible levels of charges could be the following:

------------------------------------------------------------------------
                                      Number                    Annual  
          Type of aircraft           in fleet  Illustrative    revenue  
                                        \1\        fees      (thousands)
------------------------------------------------------------------------
Single Engine Pistons..............   123,600        $100       $12,360 
Multi-engine Pistons...............    15,800       1,000        15,800 
Turboprops.........................     4,900       9,000        44,100 
Turbojets..........................     4,400      18,000        79,200 
Piston Helicopters.................     1,500         500           750 
Turbine Helicopters................     3,200       1,500         4,800 
Subtotal...........................   153,400  ............     157,010 
Large Jet Aircraft.................     4,725      20,000        94,500 
                                    ------------------------------------
    Total..........................   158,125  ............     251,510 
------------------------------------------------------------------------
\1\ Based on 1997 forecast.                                             
                                                                        
Note: It is important to bear in mind that these fees would be          
  instituted in lieu of, not in addition to, the existing aviation      
  taxes.                                                                

   Airmen Certification Registration and Airmen Medical Certification

       FAA certifies that airmen (e.g., flight engineers, pilots, 
     mechanics) meet certain qualifications/requirements, for 
     example, that pilots have flown a minimum number of hours. 
     FAA assesses charges for certifying foreign airmen, but does 
     not now assess a fee for domestic certifications. Fees could 
     be established, comparable to those charged for foreign 
     certifications, ranging from $250 to $400. Once certified, 
     airmen could be charged an annual registration fee, like an 
     individual's automotive driver's license. Annual fees might 
     be the following:

------------------------------------------------------------------------
                                      $15 annual  $20 annual  $25 annual
               Airmen                     fee         fee         fee   
------------------------------------------------------------------------
Student Pilots......................           X  ..........  ..........
Private Pilots......................           X  ..........  ..........
Mechanics...........................           X  ..........  ..........
Flight Navigators...................           X  ..........  ..........
Parachute Riggers...................           X  ..........  ..........
Dispatchers.........................           X  ..........  ..........
Commercial Pilots...................  ..........           X  ..........
Flight Engineers....................  ..........           X  ..........
Flight/Ground Instructors...........  ..........           X  ..........
Airline Transport Pilots............  ..........  ..........           X
------------------------------------------------------------------------

       A user fee is proposed to charge pilots to recover the 
     costs to administer the Medical Certification and Airmen 
     Medical Examiners Programs. To do so, the following fees 
     might be assessed:

------------------------------------------------------------------------
                                        No of       Possible   Projected
           Certificate               certificates      fee      revenue 
-----------------------------------------\1\----------------------------
1st Class Medical Certificate                                           
 (commercial pilots; examined                                           
 every six months)...............       170,000          $30  $5,100,000
2nd Class Medical Certificate                                           
 (annual examination)............       115,000           25   2,875,000
3rd Class Medical Certificate                                           
 (private pilots examined every                                         
 two years)......................       170,000           15   2,550,000
                                  --------------------------------------
    Total........................       455,000     ........  10,525,000
------------------------------------------------------------------------
\1\ The number of certificates will decrease in the future when         
  recreational pilots are not required to take a medical examination,   
  but are able to self-certify that they are medically qualified to fly.

       To simplify the administrative processing and to make it 
     easier for airmen to pay, rather than charge a separate 
     medical certification fee and a separate airmen registration 
     fee, these charges should be combined into a single fee.


            certification of air operators and air agencies

       Individuals and companies who wish to provide aviation 
     services to the public must be certified by FAA that they 
     meet certain requirements. These are mandated by law and 
     include requirements relating to airplane performance, 
     airworthiness, training programs, operating manuals, and crew 
     member qualifications. Except for the certification of 
     foreign repair stations, FAA does not charge for the time and 
     resources expended in granting a certificate. Fees could be 
     charged to cover the cost of the initial certification and 
     annual renewals. Air operators include large airlines, 
     commuter and small charter airlines, foreign airlines, 
     external load operators, and agricultural operators. Air 
     agencies include repair stations, pilot training schools, and 
     maintenance schools.
       An initial certification charge would be a flat rate 
     determined by a formula using historical data. For example, 
     to certify a large airline, FAA could charge $202,000, which 
     is based on an average of 2000 inspector hours at a rate of 
     $101 per hour. Annual renewal fees could be a rate based on 
     the complexity of the review.


                       international comparisons

       User fees for certification and regulation are not without 
     precedence. A review of fees charged by Australia, United 
     Kingdom, Canada, and Japan, showed that all four countries 
     charged fees for an air operator certificate, pilots' and 
     other airmen's licensing, and certificates of airworthiness. 
     See exhibit No. 2, ``Certification and Regulation Fees--
     International Comparisons.'' Fee schedules for each country 
     can be provided. Generally, Canada's certification and 
     regulation fees, like the United States' at this time, are 
     nominal, and do not capture the costs of providing the 
     services. About 20%-30% of Canada's regulatory function is 
     funded by user fees, and 70%-80% is subsidized by general 
     taxpayers.
       In almost all instances, instituting the illustrative 
     certification and regulation fees would require new or 
     revised authorizing legislation and an accelerated rulemaking 
     process. S. 1239, ``Air Traffic Management System Performance 
     Act of 1995,'' a bill submitted by the Senate Committee on 
     Commerce, Science, and Transportation's Subcommittee on 
     Aviation, would allow the establishment of fees for safety, 
     certification, security, training, inspection, and other 
     activities. In addition, the bill mandates that the fees go 
     into effect 45 days after submission to Congress. This is 
     important since historically our experience has shown that it 
     takes an average 2.4 years to go through the usual rulemaking 
     process.
       In an environment where users would be charged for 
     services, fees for certification and licensing make sense, 
     despite vehement opposition by those who would be charged. 
     For a number of reasons, however, collection of these fees, 
     while not impossible, would probably be difficult in FY 1996.

[[Page E456]]



                   EXHIBIT NO. 2--CERTIFICATION AND REGULATION FEES INTERNATIONAL COMPARISONS                   
----------------------------------------------------------------------------------------------------------------
                                                      United                                                    
            User Fee                Australia       Kingdom\1\       Canada\2\         Japan       United States
----------------------------------------------------------------------------------------------------------------
Air Operators Certificate......  Yes              Yes             Yes             Yes             No.           
Pilot License..................  Yes              Yes             Yes             Yes             1997.         
Licensing for Airmen Other Than  Yes              Yes             Yes             Yes             1997.         
 Pilots.                                                                                                        
Airmen Medical Certification...  ...............  Yes             Yes             Yes             No.           
Other Designees (airworthiness   Yes              ..............  No              ..............  No.           
 representatives, manufacturing                                                                                 
 inspection representatives).                                                                                   
Certificate of Airworthiness...  Yes              Yes             Yes             Yes             No.           
Certificate of Airworthiness     Yes              Yes             No              Yes             No.           
 Renewal.                                                                                                       
Noise Type.....................  ...............  Yes             No              Yes             No.           
Noise Type Renewal.............  ...............  ..............  No              Yes             No.           
Type Certificate...............  Yes              Yes             Yes             Yes             No.           
Aircraft Registration..........  ...............  ..............  Yes             Yes             Yes.          
Simulator Certificate (Annual    ...............  Yes             No              ..............  No.           
 and Renewal).                                                                                                  
----------------------------------------------------------------------------------------------------------------
\1\ Other fees charged include: aircraft engine emissions; air traffic controllers' license (Canada also charges
  this fee); flying exhibit fees where more than 500 people are likely to attend.                               
\2\ Generally these charges do not reflect costs of providing service. About 70-80% of Canada's regulatory      
  function is subsidized by general taxpayers, and 20-30% is funded by user fees.                               
                                                                                                                
Note: Australian fees in effect on 7/90. Civil Aviation Authority (United Kingdom) fees in effect on 4/95 (rates
  are updated annually). Canadian fees effective as of 8/95. Japan's user fees in effect on 10/95.              

       As shown in the very first chart, the total projected 
     revenue from certification, regulation, and licensing user 
     fees is $345.1 million. This compares with the allocated 
     cost\1\ for Aviation Regulation & Certification of $658.6 
     million, resulting in a shortfall of $313.5 million. (See 
     Appendix No. 2, ``Comparison of Costs and Revenues by 
     Activity.'') While the precise amount of the deficit can be 
     adjusted, e.g., adjust aircraft registration fee, reexamine 
     aircraft certification revenue projection, or institute 
     additional fees, the bottom line is that there is a sizable 
     deficit between revenue from user fees and the costs of 
     providing certification and regulation services.

                          ____________________