The airlines are seeking a one-year reprieve from the federal tax on aviation fuel. Good idea. Better idea: Make the relief permanent.
The federal tax on aviation fuel brings in a mere $600 million a year in revenues. That’s a pittance in a budget that exceeds $2 trillion.
Congress would have no trouble finding places to cut $600 million in spending this year — or any other for that matter. There are more than 6,000 pet projects alone in the fat $286.4 billion highway bill that was passed and signed this summer.
But to domestic carriers, which have lost more than $30 billion over the last four years, $600 million is a significant sum. They’re being hit hard by high fuel costs and are still feeling the effects of the economic downturn earlier in the decade. They could use a break from feeding government’s voracious appetite.
Washington currently imposes a 4.3 cents per-gallon tax on aviation fuel, which has soared in price in the last year. Analysts say domestic carriers’ fuel costs have recently increased by nearly a third, from $21.4 billion in 2004 to $28.1 billion this year. This is after averaging $11.8 billion from 1992 through 2001.
Opponents will screech that fuel tax relief for the airlines will be a subsidy that taxpayers will have to fund. But that’s not exactly right. As we mentioned already, if Congress cuts spending taxpayers won’t have to make up anylosses.
More importantly, allowing airlines to keep their own money isn’t the same as the $10 billion in loan guarantees — essentially a bailout — that Congress provided after Sept. 11.