Is airline security fee in budget a tax in disguise?
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.