[Congressional Record Volume 145, Number 58 (Tuesday, April 27, 1999)]
[Senate]
[Page S4278]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MURKOWSKI (for himself, Mr. Akaka, Mr. Stevens, and Mr. 
        Inouye):
  S. 888. A bill to amend the Internal Revenue Code of 1986 to modify 
the air transportation tax changes made by the Taxpayer Relief Act of 
1977; to the Committee on Finance.


      Air passenger taxes on flights to and from alaska and hawaii

  Mr. MURKOWSKI. Mr. President, today, along with Mr. Akaka, Mr. 
Stevens, and Mr. Inouye, I am introducing legislation that will provide 
a measure of relief to the citizens of Alaska and Hawaii who must rely 
on air transport far more than citizens in the lower 48.
  When Congress adopted the balanced budget legislation in 1997, one of 
the provisions of the tax bill re-wrote the formula for calculating the 
air passenger tax for domestic and international flights. As part of 
this formula change, Congress adopted a per passenger, per segment fee 
which disproportionately penalizes travelers to and from Alaska and 
Hawaii who have no choice but to travel by air.
  The legislation we are introducing today would reinstate the prior 
law 10 percent tax formula for flights to and from our states. In 
addition, the $6 international departure fees that are imposed on such 
flights would be retained at the current level and would not be 
indexed. I see no reason why passengers flying to and from our states 
must face a guaranteed increase in tax every year because of inflation. 
We don't index tobacco taxes, we don't index fuel taxes; why should 
government automatically gain additional revenue from air passengers 
simply because of inflation?
  Mr. President, this legislation requires that intrastate Alaska and 
Hawaii flights will be subject to a flat 10 percent tax if such flights 
do not originate or terminate at a rural airport in our states. In 
addition, the definition of a rural airport is expanded to include 
airports within 75 miles of each other where no roads connect the 
communities. This provision not only benefits Alaska, but many island 
communities throughout the United States. In many towns in Alaska, air 
transport is the only viable means of transportation from one community 
to another. There is no reason these airports should be denied the 
benefit of the special rural airport tax rate simply because our state 
does not have the transportation infrastructure or geographic 
definition that exists in most of the lower 48.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 888

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. MODIFICATIONS TO AIR TRANSPORTATION TAX CHANGES 
                   MADE BY TAXPAYER RELIEF ACT OF 1997.

       (a) Elimination of Inflation Adjustment for Tax on Certain 
     Use of International Travel Facilities.--Section 4261(e)(4) 
     of the Internal Revenue Code of 1986 (relating to inflation 
     adjustment of dollar rates of tax) is amended--
       (1) in subparagraph (A), by striking ``each dollar amount 
     contained in subsection (c)'' and inserting ``the $12.00 
     amount contained in subsection (c)(1)'', and
       (2) in subparagraph (B)(ii), by striking ``the dollar 
     amounts contained in subsection (c)'' and inserting ``the 
     $12.00 amount contained in subsection (c)(1)''.
       (b) Modification of Rural Airport Definition.--Clauses (i) 
     and (ii) of section 4261(e)(1)(B) of the Internal Revenue 
     Code of 1986 (defining rural airport) are amended to read as 
     follows:
       ``(i) there were fewer than 100,000 commercial passengers 
     departing by air during the second preceding calendar year 
     from such airport and such airport--

       ``(I) is not located within 75 miles of another airport 
     which is not described in this clause, or
       ``(II) is receiving essential air service subsidies as of 
     August 5, 1997, or

       ``(ii) such airport is not connected by paved roads to 
     another airport.''
       (c) Imposition of Ticket Tax on Segments to and from Alaska 
     or Hawaii or Within Alaska or Hawaii at Rate in Effect Before 
     the Taxpayer Relief Act of 1997.--Section 4261(e) of the 
     Internal Revenue Code of 1986 (relating to special rules) is 
     amended by adding at the end the following:
       ``(6) Segments to and from alaska or hawaii or within 
     alaska or hawaii.--Except with respect to any domestic 
     segment described in paragraph (1), in the case of 
     transportation involving 1 or more domestic segments at least 
     1 of which begins or ends in Alaska or Hawaii or in the case 
     of a domestic segment beginning and ending in Alaska or 
     Hawaii--
       ``(A) subsection (a) shall be applied by substituting ``10 
     percent'' for the otherwise applicable percentage, and
       ``(B) the tax imposed by subsection (b)(1) shall not 
     apply.''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect 7 days after the date of the enactment of 
     this Act.
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