The US ticket tax looks likely to return, but its reappearance could be short-lived as the user fee option gains support following a concerted campaign by the major carriers.
At presstime, the Department of Transportation was urging Congress to approve the bill to reinstate the 10 per cent tax until the end of September. Officials were hopeful the legislation would come into force on 1 March.
Renewing the ticket tax, which provides almost 90 per cent of the Federal Aviation Administration's budget, has become a matter of some urgency. The tax expired in December and with it the flow of funds into the FAA's coffers. To make matters worse, $1.4 billion in taxes collected this year on tickets sold in 1996 cannot be credited to the fund. The DOT has been pressing for reinstatement of the ticket tax as an interim solution.
But in the longer term, the DOT has made it clear that it supports the introduction of some form of user fee. 'We want to signal a direction towards user fees,' says DOT deputy secretary Mortimer Downey. The prospect of the tax being replaced by a user fee system has become even more real after the influential Gore Commission threw its weight behind the concept (see story right).
This will come as welcome news for the coalition of the seven largest US carriers, which has been arguing for the introduction of a user fee, saying it would distribute costs more fairly among all airlines. The problem facing the authorities is to find a system that is perceived as fair. The only proposal tabled so far comes from the coalition and would shift nearly $600 million in costs onto the low-fare, no-frills operators.
Source: Airline Business