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Mon, Feb 05, 2007

KY Airplane Tax Impacting State Economy

Four County Tax Levied On Private Airplanes Owned By Corporations

Four of Kentucky's 120 counties are levying taxes on personal property, including private airplanes owned by corporations, and the result, according to critics, is a negative economic impact on the region.

And the tax is no small "fee." According to airport manager Rob Barnett, Bowling Green-Warren County Regional Airport (BWG), the 2006 local property tax for one Lear jet at BWG was $32,000. 

"These taxes are a huge obstacle for airport operators who are trying to attract a corporate operator,"
Barnett said. "We have several corporate aircraft. All those registered in Kentucky received a bill like that. You can imagine the uproar we're hearing from these folks."

"Local school boards had not assessed that tax in many years," Barnett noted. "Many aircraft owners were not aware of it. I'm not sure why they've started levying the tax."

The tax, Barnett confirmed, is chasing airplane operators away. "Here in Bowling Green, we're 20 to 30 miles from the Tennessee border," Barnett said. "Up in Lexington and northern Kentucky, planes are going into Ohio."

The impact, according to The Heartland Institute, affects existing jobs, tax revenue, and ability to attract new business to the Blue Grass state.

Said state Sen. Richard Roeding, whose district includes all of Boone County - one of the four counties included in the law, "This tax has been chasing the private aircraft industry out of Kentucky. Corporate jets are going to Ohio, Tennessee, and other border states."

Fayette, Jefferson and Warren counties are the other three counties with the ability to levy the tax.

Airports benefit from the presence of corporate jets with revenues from items such as additional hangar leases and fuel sales increase. Airport jobs also increase for support staff such as airplane mechanics, Barnett added.

Airport usage also impacts FAA funding; the more planes that use an airport, the greater the funding, Barnett said.

Local school districts in the four counties oppose eliminating the tax. According to Roeding, the tax brings in about $2 million annually in the four counties.

"A couple of liberal lawmakers won't even talk about it. They say you're helping the rich and hurting the poor," Roeding said. "I say this is an economic development issue. Getting rid of the tax will help people."

Roeding cited a recent conversation with Dan Tobergte, chief executive of the Northern Kentucky Tri-County Economic Development Corporation, who said Procter & Gamble had considered expanding in Kentucky and moving seven corporate jets there in 2006.

The company opted to expand in Ohio and keep the jets there.

Four hundred jobs that would have been created in Kentucky did not materialize, Tobergte noted.

"We're not certain we would have won them, but this tax did put us at a disadvantage," Tobergte noted. "Most states have eliminated this tax for corporate jets. Ohio, across the river from us, eliminated it a while back."

Tobergte said he and other economic development officials plan to lobby lawmakers for legislation mandating the elimination of the tangible property tax on aircraft.

FMI: www.heartland.org

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