[Congressional Record Volume 144, Number 137 (Monday, October 5, 1998)]
[Extensions of Remarks]
[Page E1905]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF LEGISLATION TO MODIFY THE TAX ON COMMERCIAL AVIATION 
                          FOR ISLAND AIRPORTS

                                 ______
                                 

                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                        Monday, October 5, 1998

  Mr. NEAL of Massachusetts. Mr. Speaker, today Congressman Delahunt 
and I are introducing legislation to modify the tax on commercial 
aviation to and from airports located on sparsely populated islands. 
Senator Chafee has introduced companion legislation in the Senate.
  The Taxpayer Relief Act of 1997 replaced the 10 percent airline 
ticket tax with a combination ticket tax and per passenger segment 
charge. Under prior law, domestic air passenger transportation was 
subject to an excise tax equal to 10 percent of the amount of the 
ticket price. The new formula, which is gradually phased-in, is a 
combination of a 7.5 percent excise tax on the price of a ticket and a 
fixed fee of $3 per segment.
  Congress enacted a new formula to ensure a long-term stable funding 
source for the Airport and Airway Trust Fund. The formula was changed 
to reflect a user-based approach to pay for the use of FAA service and 
facilities. This new formula has resulted in inequities for short 
distance flights between an island and the mainland. When fully phased-
in, the new tax formula could represent as much as 18 percent of the 
ticket price of a short distance flight to an island.
  Short distance flights between islands and a mainland make little 
demand on Air Traffic Control (ATC) services as these flights do not 
use ATC centers, and rarely use departure or arrival control. These 
short island flights usually are transferred from the departure control 
tower to the destination control tower.
  Air and ferry transportation provide islands with a vital link to the 
mainland for shopping, employment, health care and other needs. For 
these communities, air and ferry service maintain a delicate balance, 
where both are needed to meet the communities' needs for mainland 
access.
  The new formula is harsh on island communities and for this reason, 
the legislation I am introducing will provide more equitable tax 
treatment for short distance flights to and from islands. This 
legislation would modify the tax to allow island airports to pay a 10 
percent excise tax instead of the new formula which includes a segment 
fee. The legislation defines an island airport as an airport located on 
an island with population of 20,000 or less, 400,000 or fewer 
commercial passengers departing by air from such airport, and 50 
percent or more of the initial flight segments of such commercial 
passengers are 100 miles or less.
  I urge my colleagues to review this legislation and to consider 
addressing the inequities that were created by the new ticket tax 
formula.

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