Aviation industry needs tax break
Earlier this year, Maine eliminated its sales and use tax (SUT) on fixed-wing aircraft sales, parts, maintenance and repair. The move will boost the number of new start up businesses, create new jobs and revitalize the aerospace industry.
Pennsylvania now is the only northeastern state not to enact some form of meaningful tax reform for fixed-wing aviation. Because our SUT is still in place, the commonwealth is at a distinct disadvantage over states like New York and Ohio in terms of performing aircraft maintenance, repair and overhaul.
According to a May 2010 report by AeroStrategy, LLC, the Empire State employed about 9,400 people in aviation maintenance and Ohio, 8,300. Pennsylvania employed only 2,900. Pennsylvania boasts several distinguished technical schools that teach aviation mechanics, but many graduates, like 80 percent of those at Pittsburgh Institute of Aeronautics, are forced to relocate from Pennsylvania to find work in the field.
In terms of annual economic impact, New York and Ohio report $1.27 billion compared to Pennsylvania at $605 million. The aviation SUT itself contributes only about $5 million to the general fund because business is being lost to other states.
We are sponsoring legislation (H.B. 1100) that would eliminate the SUT for fixed-wing aircraft. The legislation will be the subject of a hearing by the House Finance Committee on Oct. 12, at the Washington County Airport, Washington, Pa.
We believe that this policy change will generate real economic gains. Shortly after Pennsylvania eliminated a similar tax on helicopters a few years ago, a global leader in helicopter manufacturing expanded part of its operation in Chester County, creating 412 family-sustaining jobs paying, on average, $50,000 a year.
With fixed-wing aircraft, the opportunities are even greater. Because aircraft and aircraft parts are so expensive, many aircraft owners go to neighboring states where they can avoid sales taxes for regular maintenance and repairs.
Additionally, corporations face steep fees if they need to hangar a plane in Pennsylvania forcing many to headquarter in other states.
Pennsylvania has an opportunity to become a hub for the aviation and aeronautic industry. We have the opportunity to reinvigorate our 133 public use and regional airports. Now is the time to eliminate this regressive tax and make Pennsylvania, like Maine and so many other states, a good place for business to land.
State Rep. Peter J. Daley II, D-California, represents the 49th Legislative District, which includes parts of Washington and Fayette County.
State Rep. Rick Geist, R-Altoona, represents the 79th Legislative District, which includes Blair County.