Airlines for America (A4A), the industry trade organization for the leading U.S. airlines, today urged Congress to reject the proposed tax hikes on air travel that are included in the President’s FY2021 budget request.
The suggested tax hikes would cost passengers an additional $2.7 billion per year on top of the $26 billion they paid in 2019. These are unnecessary tax increases that would jeopardize the unprecedented choice, access and affordability that consumers enjoy today. Nearly 90 percent of Americans have flown on an airline some time in their lives, and 42 percent of them have family incomes under $75,000, according to a recent A4A survey. Increasing taxes in any form would burden families with higher costs to fly, curtail job growth and limit air service options to small and rural communities.
U.S. aviation and its customers are already subject to 17 federal aviation taxes and fees.
Specifically, the administration’s FY2021 budget request proposes an average of $2.7 billion per year in higher federal aviation taxes and fees on the traveling and shipping public, including:
Transportation Security Administration (TSA) Passenger Security Fee Increase. The budget proposes to increase the passenger security fee 18 percent, from $5.60 to $6.60, in FY2021 and then an additional 25 percent, from $6.60 to $8.25, in FY2022. This proposal would increase taxes on passengers by an estimated $618 million in FY2021 and $22.3 billion between FY2021 and FY2030.
Customs User Fee Increase. The budget proposes to increase the Customs Inspection User Fee (CUF) 34 percent, from $5.89 to $7.89. This proposal would increase taxes on passengers by an estimated $431 million in FY2021 and $2.4 billion between FY2021 and FY2030.
Immigration User Fee Increase. The budget proposes to increase the Immigration Inspection User Fee (IUF) 29 percent, from $7 to $9. This proposal would increase taxes on passengers by an estimated $376 million in FY2021 and $2.2 billion between FY2021 and FY2030.
A4A also called on Congress to end the practice of diverting security fee funds away from security to instead pay for deficit reduction. Since 2014, approximately $1.3 billion per year in TSA fees has been diverted away from its intended purpose, which is to pay for aviation security screening. Similar diversions have also been used for Customs and Border Protection (CBP) fees. Instead of increasing taxes, there should be a focus on addressing the annual diversion of billions of dollars of security funds.