Aviation Fuel Taxes Being Diverted To Federal Highway Fund

The Aircraft Electronics Association is urging its members in the U.S. to contact their member of Congress in the U.S. House of Representatives and request they sign a letter in support of a provision in H.R. 7, the American Energy and Infrastructure Jobs Act, or the Highway Bill of 2012, which would repeal the fuel fraud provision.

House General Aviation Caucus Co-Chairmen Sam Graves (R-MO) and John Barrow (D-GA), along with other members of Congress, have sponsored a letter to Representative Dave Camp (R-MI), chair of the Committee on Ways and Means.

"Since October 1, 2005, nearly all taxes collected for non-commercial jet fuel used in general aviation have been deposited in the Highway Trust Fund instead of the Airport and Airway Trust Fund, where the funds are desperately needed," the letter states. "Today, in order for jet fuel taxes to be deposited in the Airport and Airway Trust Fund, the fuel vendor must go through an arduous registration process and then deal with a substantial administrative burden to maintain records for the IRS that were not previously required. The administrative hassle associated with this process has resulted in many fuel providers opting to pass the additional tax on to the end user and forego the process of applying for a refund.

"There is no requirement for vendors to register with the IRS, it is purely voluntary. When these fuel vendors forgo the refund process, due to its administrative burden, the Airport and Airway Trust Fund receives no revenue from the taxes collected on the sale of aviation jet fuel because non-commercial end users are not permitted to apply for the refund themselves. This diversion of aviation fuel taxes has cost the Airport and Airway Trust Fund approximately $50 million annually since the enactment of SAFETEA-LU and is anticipated to cost another $500 million over the next ten years. This policy has increased Highway Trust Fund revenues at the expense of the Airport and airway Trust Fund."

AEA says it is important to obtain as many Congressional signatures as possible by Friday, April 20, as the bill is scheduled to be on the floor of the U.S. House of Representatives early next week.

Section 11161 of H.R. 3, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy of Users (SAFETEA-LU), which passed in the 109th Congress, altered the collection of fuel taxes for business and general aviation fuel providers. This change was made amid concerns that highway truck drivers were buying aviation jet fuel and mixing it with fuel from another substance to make it operable in highway trucks, thus avoiding the purchase of highway diesel fuel and its higher taxes. However, there is no evidence of widespread fuel fraud of this nature.

The AEA asserts that it is imperative that all tax revenue on jet fuel used in aviation be deposited in the Airport and Airway Trust Fund and supports the inclusion of a provision in H.R. 7 that would repeal the fuel fraud provision.

FMI: www.house.gov, www.aea.net