[Congressional Record Volume 143, Number 93 (Friday, June 27, 1997)]
[Extensions of Remarks]
[Page E1339]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                AVIATION TAX PROPOSALS BAD FOR AVIATION

                                 ______
                                 

                        HON. WILLIAM O. LIPINSKI

                              of illinois

                    in the house of representatives

                        Thursday, June 26, 1997

  Mr. LIPINSKI. Mr. Speaker, I rise today to bring to my colleagues' 
attention the devastating impact this Taxpayer Relief Act will have on 
one single industry--the aviation industry. It is impossible to balance 
the budget and give taxpayers billions in tax cuts at the same time 
without raising revenues. Therefore, through massive tax increases, the 
Ways and Means Committee has decided to use the airlines, and the 
airline consumer, as the primary source of revenue. Of the total $48 
billion in tax increases over the next five years, $34 billion, or 70 
percent, will be raised from the aviation industry.
  The airline passenger will now have to pay both a ticket tax and a 
new per flight segment head tax of $2.00, which will progressively 
increase each year, yet the passenger will not benefit from the 
increased revenues. This is because the revenue raised from increased 
aviation taxes will be used to accomplish other unrelated tax cuts in 
this package. There is absolutely no relationship between the 
additional taxes and the programs that these taxes are supposed to 
support. The additional taxes will not fund new safety and security 
measures; they will not fund air traffic control modernization efforts; 
and, they will not fund critical airport improvement projects. In fact, 
under the budget agreement, federal funding of air traffic control 
operations and airport development will likely decline over the next 
five years as these new taxes are increased.
  It is important to note that the increased revenues will be paid 
entirely by the airline passenger. It is the consumer who pays the 
ticket tax, the head tax, the departure and the arrival tax. However, 
the cargo waybill tax, which is paid by the profitable cargo airline 
industry, is simply extended in this tax package. Cargo companies, 
which fly hundreds of planes domestically and internationally each day 
at a profit, will not pay a cent more.
  Last year, when the aviation excise taxes lapsed, the airline 
industry and the Congress began to examine how to improve the way the 
Federal Aviation Administration is financed and how to provide a more 
reliable funding stream. As the ranking member of the House 
Subcommittee on Aviation, I decided to take the lead in developing a 
fair and equitable ``user fee'' funding mechanism that would more 
closely align the funding of the FAA to the costs imposed on the system 
by the airlines. In addition, Congress created the National Civil 
Aviation Review Commission to study and recommend a new financing 
system. This Commission, which has a federal budget of $1.2 million, is 
composed of representatives of all segments of the aviation industry 
and is chaired by former Chairman of the Committee on Transportation 
and Infrastructure, Norm Mineta. However, a month before the 
Commission's expected recommendations, the Ways and Means Committee 
stepped in and raised aviation revenues without even waiting to hear 
what the $1.2 million taxpayer financed Commission has to say about 
aviation revenues and spending. Although I will continue to draft my 
user fee legislation, and the Commission will continue its important 
work, this aviation tax proposal will make it extremely difficult to 
make the necessary changes in the aviation financing system. By raising 
aviation taxes to offset other tax cuts, this proposal widens the 
existing gap between aviation revenues and spending in the budget 
process.

  In 1995 and 1996, the airline industry posted record profits. 
However, this success follows years of economic hardship when the 
airlines had to operate in the red, cutting service and eliminating 
jobs. If we take an additional $5 billion from the airlines over the 
next five years, as we propose to do today, we will completely 
eliminate their profit margin. We will kill the airlines that are 
already struggling today and will dash all others' hope for future 
growth. Aviation is an integral part of our economy. Economic stimulus 
from aviation-related activities is now estimated to be $700 billion 
dollars annually and is expected to grow to $900 billion by the end of 
the century. However, this tax package today will take the air out of 
the aviation industry. This massive tax increase will once again bring 
the dark skies of economic hardship over the aviation industry, 
effectively grounding it.

                          ____________________