Bill Aims To Fix Fuel Tax Quagmire

The National Air Transportation Association (NATA) and the National Business Aviation Association (NBAA) say legislation aimed at solving a mythical problem has caused some real concerns for fuel dealers and, believe it or not, has resulted in taxes on jet fuel being pumped into a trust fund for highway improvements. New legislation (S.2666, which has not yet been posted on the Library of Congress Web site) has been proposed by Sen. Conrad Burns (R-Mont.) that will put a stop to the bizarre arrangement until 2007 when all aviation fuel taxes expire and must be reauthorized, anyway. Last October, new rules went into effect that were designed to discourage the use of jet fuel, with its slightly lower taxes, in car and truck engines. The fuel tax on airplane fuel is 2.5 cents per gallon less than it is for truck-stop diesel. To prevent the diversion of the slightly cheaper jet fuel to cars and trucks, the government decided to make aviation fuelers charge the full tax rate and then apply for reimbursement of the difference. Not only that, the taxes on the jet fuel are deposited to the highway trust fund until the aircraft fuelers applied for their rebates. It gets worse. According to NATA, few, if any aircraft fuelers have been qualified to get the tax rebate so most have given up trying. That means they’re passing the higher taxes to their customers and all that tax money is piling up for highway projects. NATA President Jim Coyne urged quick passage of Burns’ bill to keep the mess from getting any worse. “The longer Congress waits, the more aviation businesses suffer while more money drains from the Airport and Airway Trust Fund,” Coyne said.