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Thursday, November 23, 2017
HomePolicyAirplane tax – via regulation – proposed by Gov. Walker

Airplane tax – via regulation – proposed by Gov. Walker

#ITAXALASKA

Alaska is not one of the two dozen states that require registration of airplanes. That’s a federal function and there’s not been a need to duplicate it in the 49th state.

Until now.

Hawkins

A new state registration system being proposed by Gov. Bill Walker would put every plane in a database and create a platform for an airplane tax.

Walker is looking to place a $150 tax on private airplanes of any size — whether Cessna 150s or 750s, single engine or turbo props — and a $250 tax on commercial aircraft of any size.

Think of it as a user fee — that’s what the Walker Administration says it is.

The Walker Aircraft Registration Tax, or WART, as critics are calling it, is expected to raise between $1.3 million and $1.5 million a year, a fraction of the motor fuel tax that is also being proposed by the Walker Administration earlier this year, which would raise as much as $80 million a year. Aviation fuels are included in that tax.

The aircraft registration program will cost $30,000 a year to administer. That is the equivalent of a half-time administrative assistant position in the Department of Transportation. There is no enforcement mechanism being created by the regulation, and the state thinks that aircraft owners will pay the fee via the honor system. No penalty will be imposed for ignoring the WART.

A poll conducted by the Alaska Airmens Association and the National Business Aviation Association showed that pilots in Alaska actually favor the motor fuel tax increase over either a registration fee or landing fees, “although a significant number of people responding commented that they opposed any increased fees or taxes.”

It looks like airplane owners are going to get both registration taxes and fuel tax.

 

In Anchorage, the municipality already charges between $75 and $150 to aircraft owners annually, and a $25 a month late fee. This would mean Anchorage aircraft owners will pay double taxation on their airplanes.

In Juneau, the borough owns and operates the airport, and charges a tax on commercial airlines.

WHAT ABOUT THAT PROPOSED AVIATION FUEL TAX INCREASE?

Senate Bill 25 and House Bill 60, introduced by Walker during the past legislative session, would triple the motor fuel tax, including maritime and jet fuels. Under the governor’s plan, the tax on aviation fuel in 2017 would have gone from 3.2 cents to 6.4 cents for jet fuel and 4.7 cents to 9.4 cents a gallon for aviation fuel. Then in 2018, the tax would have risen again.

Those bills are still alive for consideration in January, 2018 during regular session. The funds generated would be placed in the general fund for distribution throughout the state’s many needs, not just airport maintenance.

REGISTER, PAY STATE, RINSE, REPEAT

As the new regulation-based tax is currently proposed, much of the largest commercial airlines that frequent Alaska would be exempt because they are based out of state.

However, in-state airlines such as Ravn and Grant Aviation, Alaska Seaplanes out of Juneau and Taquan Air of Ketchikan, would be required to pay the tax, whether or not they use airstrips or waterways.

According to DOT, the tax is needed because aircraft owners should help pay for the cost of the aviation system. Commercial rates are set higher as they use the system on a daily or weekly basis, where as weekend pilots or experimental plane enthusiasts put little pressure on the system, according to DOT.

Nonprofits and faith-based groups such as Samaritan’s Purse or Bible camps that own aircraft based in Alaska would not be exempt from the tax. Senior citizens who own planes will not get an exemption, either. Any plane that is operable will be taxed under the proposed regulation, and that tax could be increased — or eliminated — in future years without going through the statutory process.

According to the FAA, there are 7,933 active pilots and 9,346 registered aircraft in Alaska.

Alaska has 400 public airports, 282 land-based, 4 public heliports, 114 seaplane bases, with a total of 747 landing areas (private, public, and military). Lakes, gravel bars, and frozen tundra areas number in the thousands, and are widely used by pilots. Seaplane bases number 114.

Alaska has 306 certified air carriers providing scheduled and on-demand services. Some, like Alaska Air and Delta, are based out of state, the FAA states.

The proposed tax is now open for public comment and public meetings are planned for November:

Nov. 9:  1st Floor Conference Room
Alaska DOT&PF 2-4 pm
3132 Channel Drive, Juneau

Nov. 14: Airport Response Center
Fairbanks International Airport 2-4 pm
5195 Brumbaugh Blvd, Fairbanks

Nov. 20: Central Region Main Conference Room
Alaska DOT&PF 2-4 pm
4111 Aviation Ave, Anchorage

Comments may also be submitted by mail to:

Rich Sewell, Aviation Policy Planner
Alaska Department of Transportation & Public Facilities
PO Box 196900
Anchorage, AK 99519

Or via email to:  StatewideAviation@alaska.gov

Comments must be received by 5:00 pm Alaska Standard Time on January 5, 2018.

[Click here to find out more details about the new airplane tax.]

[Click here to read FAA fact sheet on Alaska aviation]

 

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Written by

Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

Latest comments

  • Thirty years ago you never saw jet contrails in the skies above Anchorage; any plane near here was stopping here for fuel, and there was quite a tourism business based on travelers to and from The Orient staying over here. The 747 SP and the end of the Cold War ended that. The heavy aircraft here now are almost entirely cargo carriers and they stop here because it is more profitable to carry freight that to carry fuel. So, we’re going to risk losing that business by taxing the fuel that is the only reason they come here. We’ve already lost the jet fuel refinery at North Pole so I don’t know what if any price advantage we still have, but we’re risking ANC just becoming a place where the cargo planes make a slight turn just like the passenger planes do now.

  • Hopefully, the Bush community that was so enamored with the Walker/Ballot ticket in 2014, will recognize thus is one more way Walker is making life in the Bush harder and more expensive.

    And they remember it at the ballot bix.

  • So, the MSB had an airplane registration/fee. They finally abandoned it because only a small percentage of the pilots actually paid the tax; sometimes honesty doesn’t pay, it costs.
    The cost of hunting down the miscreants wouldn’t come close to the amount collected.
    Just wondering, because only an estimated 75% (probably low) of the air strips in the MSB are registered with the FAA – where did they get their numbers?

  • Hello,

    Should I be charged a registration tax for a parts plane that doesn’t use the goods and services that the tax provides?

    Some boroughs say an unairworthy, not flying condition aircraft isn’t Taxable, like in anchorage, and other boroughs like Kenai tax you based on FAA registration status only.

    I’ve been fighting the Kenai borough for many years on their tax system due to one flaw in the regulation. Currently our borough will send a tax bill to an owners faa registered address for each aircraft N number they own. (information readily and publicly available online). The problem is I get a bill for 7 planes, but I only have 1 that flies and uses the services the tax provides.

    You see, just because I have 7 airplanes registered in my name doesn’t mean I physically have and fly 7 airplanes. 6 of those 7 planes are simply a set of log books sitting in a box in my closet and a connex full of leftover parts.

    The borough thinks that if I’m not flying the airplane, or it’s in parts and pieces, I should simply De-register with the FAA and then they won’t tax me anymore. HAHA yea right!
    What they dont understand is how hard it is to get that registration back if you ever wanna build that plane 30 years from now. No way am I giving up registration for any aircraft EVER NO matter what condition, even if all I have left is the log books and a data plate.

    So what happens is now we have a faa database that says there’s 8000 private aircraft registered in alaska, well guess what? Half of those are in a connex or under a tarp in someone’s back yard, and will likely never fly again.

    So what I propose, is if you make the regulation based on faa aircraft registration, PLEASE paste this clause in.

    1. If the aircraft is in unairworthy condition (out of annual), please certify the aircraft is unairworthy on the form attached and the aircraft will be tax exempt.

    I think you will be astonished at how many of those registered planes don’t fly and never will.
    Again, Please only tax aircraft that use the services the tax provides. Aircraft are different than cars, I can’t just go to the dmv and re register no questions asked.

    Thank you,

    Andrew

  • I get it! We got sort of tired of Republicans in the government, so now we have a tax and spend administration. Less PFD, that’s fine by me. Sales tax, Income Tax, now Aircraft Tax. Maybe we could have a Breathing Tax, or perhaps an Exhaling Tax. Let’s be fair though, since the rich never pay their “fair share”, we should have a garage tax. If you have a garage, whether or not you can fit a car into it, you should pay a luxury tax on that privilege. One car garage is allowed an exemption so that the middle class can claim a tax advantage, but two car garages would be taxed at 1 1/2 times the rate that would have been charged for a one car garage, if there was a one car garage tax. Then we could have a three car garage tax that would be levied at four times the theoretical one car garage rate, to make up for lost revenue from the one car garage free loaders. If you have more garages than three, each additional garage could be charged at 100% the three car garage rate so that the rich could finally be adding a fair share to the revenue stream.

    Since Democrats are always asking “how are we going to pay for tax cuts?” I would ask, how are we going to pay for all the tax increases when people begin to leave the state to avoid taxes. It’s not like we live in a garden spot, after all. We are here for one reason or another, but we stay in a large part due to the lack of government interference in our lives. If that benefit is gone, then why stay?

    Oh, and Thank You Gov. Walker

  • I would suspect that the proposed tax will not entirely cover the maintenance costs on the 130 airports that the State maintains. User taxes should be something that everyone gets behind as it is the users that benefit.

  • Alaska must maintain over 100 airports across a vast state. How do we pay for that? The author of this article is happy to attack Walker for trying to find the funds to keep these airports going, but the author offers nothing about a realistic way to fund these expensive airports.

    Maybe the author could explain how many of these airports we should simply close?

    Should Alaskans pay a broad- based tax to subsidize these rural airports and not require those who actually use them to bear the real costs of their operation and maintenance?

    The massive deficits we face are in large part due to the fact we are giving away our oil. As long as we keep giving away our oil the deficits are not going away. Eventually we either need to pay for these things or simply close them.

    Which option do you prefer? Please be specific.

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