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Bigger Government Burdens on Air Travel, Like PFCs, Won’t Fly with Taxpayers

by Pete Sepp / /


Dear Member of Congress:

During a March 23 Senate Committee on Commerce, Science, and Transportation hearing on the Federal Aviation Administration reauthorization bill and improving airport infrastructure, Members will hear calls for an increase in the Passenger Facility Charge (PFC). On behalf of National Taxpayers Union’s (NTU) members across America, I write to offer our perspectives and concerns over such proposals.  Raising the net government tax and fee burden on air travel, which is already incredibly onerous, should not be among the policy options for the Commerce Committee or any other entities in the House or Senate to consider.

It may be true that economic factors have eroded the buying power of a PFC since its last increase to $4.50 in the year 2000. Yet, FAA data shows that overall PFC collections have still managed to climb 94.9 percent between 2000 and 2015. This trend is almost twice as fast as the increase in the Consumer Price Index for All Urban Consumers, plus the rise in passenger enplanements at primary U.S. airports, over the same period (2015 was the most recent year for consistent data on all three factors when NTU last conducted this analysis).

There are other ways to measure this trend, such as comparing the PFC’s value to a construction cost index. The problem with doing so is that flawed government policies, such as project-labor rules and antiquated building regulations, can help to drive up those indices even as materials get more expensive.  Indeed, it is directly within the purview of Congress to address some of the root causes behind higher construction costs in a direct, pro-taxpayer manner.

Unfortunately, it is also true that since the year 2000, Americans have been hit with increases in the plethora of government-authorized levies on air travel. The most recent imposition more than doubled the passenger security fee as part of a revenue-raising exercise in the Bipartisan Budget Act. The Administration’s budget outline submitted last week already envisions a steep increase in this fee which, if enacted by Congress, would exacerbate the problem.

Whatever mix of taxes, fees, and charges Congress decides to permit on air travel, and whatever the merits or drawbacks of PFCs may be, lawmakers have a special responsibility to ensure that the net bottom-line cost of government on an airline ticket and system users does not become even less affordable. Indeed, that cost could actually shrink if upcoming legislation incorporates pro-taxpayer reforms such as replacing FAA-funded air traffic control with a user-based system, further expanding private security screening contracts at airports, facilitating more public-private partnerships in airport development through tax and other policy changes, and reexamining lower-priority FAA programs.

The typical middle class air traveler now pays a far higher average tax rate on an airline ticket (21 percent) than he or she does on a 1040 income tax return. Congress should be working to remedy, rather than worsen, this situation with comprehensive reforms that respect all stakeholders in the aviation system.  

Sincerely,
Pete Sepp, President