Pena Urges Extension of Air Ticket Tax

Secretary of Transportation Federico Pena urged Congress on Tuesday to extend the 10% airline ticket tax to save losses of $1 billion from the Federal Aviation Administration’s trust fund.

The tax is to expire on Dec. 31.

Pena said the loss in tax revenue will cripple airport safety and development programs. He said the nation urgently needs to renew the tax and establish a long-term system to finance the agency in “this time of dynamic aviation growth.”

Revenue from the tax pays for operations of the FAA, the agency that oversees airline safety. The FAA says if the ticket tax expires, the agency’s trust fund cash balance will be exhausted by July 1997, and the agency would be unable to pay for new construction and improvements at U.S. airports and improvements to the nation’s aging air traffic control system.

The FAA’s budget for fiscal 1997 calls for about $5.31 billion from the trust fund. Without a new source of revenue for the fund, the agency estimates it will fall about $1 billion short of that amount.

Earlier this month, seven of the biggest U.S. airlines proposed replacing the airline ticket tax with a user fee, shifting more of the burden to discount and commuter carriers. But, according to the General Accounting Office, user fees favor larger airlines at the expense of low-fare or small airlines.

There is bipartisan support for reinstating the ticket tax. In a letter to the Senate Finance Committee, Majority Leader Trent Lott (R-Miss.) and Minority Leader Tom Daschle (D-S.D.) urged panel members to make the ticket tax one of their first orders of business in 1997.

The tax is all but certain to lapse, at least for a time. Congress isn’t scheduled to convene until January and won’t tackle most legislation until February.