15 Groups Protest Budget Proposal to Double Aviation Security Taxes

Fifteen leading airline, business and labor groups today urged Congress to reject a federal budget proposal that would double aviation security taxes

"It was a dangerous idea to give a government agency carte blanche to raise taxes whenever it wants to," said Grover Norquist, president of Americans for Tax Reform. "TSA, despite having a needed role in safeguarding our nation's security, is feathering its nest like any other government bureaucracy."

"One must question the wisdom of imposing an additional substantial burden on a financially beleaguered U.S. aviation industry, by doubling the security fee," said Patrick V. Murphy, Jr., partner in Washington D.C.-based Gerchick- Murphy Associates and former DOT Assistant Secretary of Transportation for Aviation and International Affairs. "U.S. airlines face unprecedented stress, with five now in bankruptcy and all but two operating at a loss last year. At this juncture, adding new costs to this fragile sector could speed the demise of weakened carriers, and so undermine the competitive benefits of the aviation system for passengers and consumers, and industry workers."

"Any increase in the excise tax on airline tickets will cost not only airline jobs, but will be felt in lower employment and payrolls in all of the industries that rely on air travel," said John Dunham, president of John Dunham and Associates and noted international economist specializing in excise taxes. "Such a proposal, at a time when the U.S. airline industry is going through a painful restructuring, will likely cost American taxpayers and businesses much more than the $1.5 billion that the president is looking for. A fair and equitable tax requires that the tax burden be shared proportionately among taxpayers. Organizations like the National Conference of State Legislatures have suggested that excise taxes on air travel are not broad based, are not equitable, are not stable revenue sources and are narrowly targeted over one specific type of economic activity. In short, they are not sound financing mechanisms."

"The airline industry, which has been hemorrhaging red ink since 9/11, will unlikely be able to pass much of the proposed increased security taxes of $1.5 billion on to its customers," said Daniel P. Kaplan, director LECG, LLC. "The industry is not well-equipped for this additional obligation. In the aftermath of 9/11, demand for air travel has fallen while the price of jet fuel, a major input, has skyrocketed. Airlines have been shedding employees, cutting wages, reshaping operations and passing pension obligations on to the PBGC as they struggle to cope with the new environment. The industry, its employees, and its customers should not be forced to shoulder even more of the nation's homeland security obligations."

"Security funding is a concern for the entire aviation industry -- including the all-cargo carriers," said Cargo Airline Association President Stephen A. Alterman. "We firmly agree that airline security is a national security issue and should be funded by all Americans, not merely those who happen to fly on aircraft. Federal funding of aviation security is necessary to help ensure the continued economic viability of the nation's airlines as they provide the vital personal and business link to the outside world."

"ITSA members agree that more than doubling the security tax on airline passengers is ill-advised," said Art Sackler, executive director, Interactive Travel Services Association. "As our industry has seen in other areas, raising taxes suppresses demand for travel and tourism services. The airlines, which are critical to the nation's economic well-being, are facing extraordinary, unprecedented challenges and this tax will harm them further."