Let airports collect their stealth tax hike

I suppose a tax hike doesn’t truly die until someone kills it.

This seems to be the case for the Passenger Facility Charge (PFC), a $4.50 tax every flyer pays on every flight. It’s folded into the price of an airline ticket. Airports and their partners in Congress are trying to nearly double that tax to $8.50, unnecessarily driving up the price you pay to fly.

{mosads}The ongoing effort by some in Congress to open the spigot on the PFC is beginning to feel a lot like a backroom deal. It’s also a textbook example of how a measure that won’t withstand scrutiny in the light of day can become law in the dead of night unless someone stops it.

This issue could have been addressed, debated and voted on in the Senate Commerce Committee, where by jurisdiction it belongs. Just weeks prior to its inclusion in the THUD appropriations bill, the Senate Commerce Committee declined to include this tax in their bill.

Two questions need to be answered before flyers are subjected to a significant increase in the PFC. The first: Do we need it? The second: Can Congress pass a PFC increase using normal legislative methods? The answer to both questions has become clearer by the day: No.

A TAX HIKE NO ONE NEEDS

America’s airports have been beating the tax increase drum for years, arguing that billions of dollars are needed so airports can upgrade infrastructure and improve the experience for flyers. America’s airlines actually agree with airports that billions of dollars are needed, and we, too, would like to see a continuing upgrade of airport facilities to match what we’re doing in airline cabins. Fortunately, airports already have the money on hand and means to collect additional funds, and infrastructure improvements have been happening around the U.S. for years. Indeed, airports have not been able to identify a single project that has been sought but not funded within the existing funding levels and mechanisms.

Just last year, airports collected $3.2 billion through the PFC, which broke a record set the year before. Passengers also pay additional taxes to fund the Airport and Airway Trust Fund (AATF), which supports airport improvement projects nationwide. The Congressional Budget Office estimates that the annual unspent reserve fund balance of the AATF will grow to almost $7 billion by the end of the 2017 Fiscal Year. That’s quite a cushion. Airports also have nearly $12.7 billion in unrestricted cash and investments and could access the bond market, too. Why raise taxes when the system is flush with cash?

Further proof that the PFC hike is a solution to a problem that doesn’t exist can be seen if you fly around the country, as 2 million-plus people do every day. More than $100 billion of capital projects have been completed, are underway or have been approved at the nation’s 30 largest airports since 2008. You’ve seen them at LAX, Chicago O’Hare and Washington Dulles and construction projects have been buzzing at smaller airports like Des Moines and Nashville, too.

WHY THE LACK OF TRANSPARENCY

A measure to significantly raise the airport tax on millions of flyers is being sprung on the American people with zero transparency, and the money that would flow to airports’ coffers is not needed.

This kind of nonsense only makes sense in Washington. A family of four living in the real world would pay $104 in PFCs alone on a typical round-trip excursion if the Senate appropriators have their way. Raising taxes always will have collateral costs, and if this tax increase were to play out across the economy, the impact would be significant: Every $1 increase in the PFC would cost airline passengers an additional $800 million annually. And remember: Airports are actually pushing for no cap on the tax which would give them unadulterated freedom to add airport taxes to airline tickets. Consumer and taxpayer groups alike have sounded off against this unjustifiable tax increase.

This measure should go nowhere, and Senate appropriators should kill it once and for all. But if airports are so intent on reaching into flyers’ pockets, I have an idea: Let them do it in the open and in the light of day. Rather than tack this tax onto the price of an airline ticket — which is already taxed at nearly 21 percent for a typical domestic round-trip fare and the increase is hidden as part of the fare — let airports collect the tax. Perhaps they could do it at kiosks, as some foreign airports do. Or they could add another line in the terminals next to the vendors that sell $5 bottles of water. Or maybe the machine where you pay $20 per day for parking could double as a PFC tax collector.

If airports want this PFC increase so badly, let them own it and collect it themselves.

Nicholas E. Calio is president and CEO of Airlines for America, the trade association for the nation’s leading airlines.

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