Is air­line se­cu­rity fee in bud­get a tax in dis­guise?

The Washington Times Daily - - Politics - BY JAC­QUE­LINE KLI­MAS

Con­gres­sional Repub­li­cans have said they won’t ac­cept higher taxes as part of a year-end bud­get deal, but crit­ics say one op­tion that’s still on the ta­ble is just a tax in­crease in dis­guise.

The White House, House Repub­li­cans and Se­nate Democrats in­cluded in their 2014 bud­gets a plan to in­crease the se­cu­rity user fee for air­plane pas­sen­gers. It would rise from $2.50 one way, with a max­i­mum of $5 per trip, to a $5 flat fee per trip — which turns out to raise a sig­nif­i­cant amount of money.

The higher air­line fee is be­ing looked at by the bud­get con­fer­ence com­mit­tee, a 29-mem­ber group try­ing to find com­mon ground be­tween Democrats who have re­jected any en­ti­tle­ment cuts, and Repub­li­cans who refuse to con­sider tax in­creases.

Ex­cept that, in the eyes of some, the fee is a tax in­crease.

“It’s of course a tax hike,” said Sean Kennedy, se­nior vice pres­i­dent of global gov­ern­ment af­fairs at Air­lines for Amer­ica. “This is noth­ing more than a mere tax grab rev­enue raiser for a bud­get deal on the backs of the trav­el­ing pub­lic.”

Pres­i­dent Obama called for the fee in­crease in his bud­get, and Sen. Patty Mur­ray, Wash­ing­ton Demo­crat, in­cluded his pro­posal in her own bud­get, which passed the Se­nate ear­lier this year. Their plan would raise the fee to $5 for all pas­sen­gers re­gard­less of stops, and in­crease it by 50 cents a year un­til 2019, when the fee would be $7.50. The plan would raise $25.9 bil­lion over 10 years.

Rep. Paul Ryan, chair­man of the House Bud­get Com­mit­tee, in­cluded the in­crease to $5 per trip in the GOP’s 2014 bud­get, but he did not in­clude the in­cre­men­tal in­crease through 2019.

A spokesman for Mr. Ryan, Wis­con­sin Repub­li­can, did not re­turn a re­quest for com­ment on the plan.

Rep. Chris Van Hollen, Mary­land Demo­crat and one of the ne­go­tia­tors try­ing to ham­mer out a fi­nal bud­get deal be­fore mid-De­cem­ber, said there are other ar­eas where Congress should be look­ing at for money be­fore turn­ing to air­line fees.

“I’m not sure why our Repub­li­can col­leagues think it’s a bet­ter idea to raise TSA fees on the Amer­i­can pub­lic than close a tax loop­hole that ac­tu­ally cre­ates in­cen­tives for Amer­i­can com­pa­nies to move their prof­its to places like the Cay­man Is­lands,” he said.

If air­lines had to ab­sorb the $2.50 fee in­crease, that would mean less prof­its to in­vest in new routes, em­ploy­ees, air­craft and tech­nol­ogy, Mr. Kennedy said. On the other hand, if air­lines passed the fee to pas­sen­gers in higher ticket prices, fewer peo­ple would fly and the air­lines would still lose money and not be able to con­trib­ute to the econ­omy, he said.

“We’re mak­ing it clear to any­one on Capi­tol Hill who will lis­ten that this is a lose/lose sit­u­a­tion for air­lines and pas­sen­gers,” he said.

Some lead­ers on Capi­tol Hill also have much to lose from harm to the air­line in­dus­try. For ex­am­ple, Boe­ing man­u­fac­tures many of its air­planes in Ms. Mur­ray’s home state of Wash­ing­ton, and Ma­jor­ity Leader Harry Reid’s home state re­lies heav­ily on tourism and air travel to Las Ve­gas, Mr. Kennedy said.

De­spite lob­by­ing from Air­lines for Amer­ica, law­mak­ers are still look­ing at boost­ing the fee.

“They said they are try­ing to put to­gether a deal that re­duces the im­pact of se­ques­tra­tion, and they’re putting all op­tions on the ta­ble in­clud­ing in­creas­ing ticket prices for pas­sen­gers,” Mr. Kennedy said.

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