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Tax Proposal Fails in Maryland Thanks to Stakeholder Efforts
April 23, 2012
Thanks to the efforts of NBAA and other stakeholders, Maryland legislators ended their session without taking action on a controversial tax proposal. As NBAA previously reported, House Bill 1345 would have added a 1 to 2 percent tax on motor vehicles, boats and airplanes. In testimony provided to the Maryland House Ways and Means Committee, NBAA expressed opposition to the tax, explaining it would drive general aviation activity away from Maryland to states with more favorable tax policies. NBAA will continue monitoring this proposal, as a special legislative session in Maryland is still possible.
NBAA's Southeast Regional Representative Harry Houckes explained, "This tax would have cost jobs and caused purchasers to base their aircraft in neighboring states with a lower tax burden. The tax would also harm Maryland's airports by driving business away from the state’s FBOs, repair facilities and other small aviation businesses." Houckes added that NBAA will continue working with legislations in Maryland during future sessions to educate them about the significant benefits general aviation provides to the state.
Under the proposal, a new 1-percent luxury surtax on purchases of "motor vehicles, boats and planes" above $36,000 would have been added. The proposed surtax would have been $350 plus 2 percent of amounts above $90,000.
Review NBAA's Letter to the Ways and Means Committee (72 KB, PDF)
Since this legislation was introduced, NBAA has been working directly with legislators and Maryland based Members to oppose the luxury tax. NBAA also coordinated with various stakeholders to ensure that the general aviation industry was well represented at a hearing on the legislation. To keep general aviation businesses and the jobs they provide in Maryland, the state must have a competitive tax structure. Under HB 1345, the surtax of 1-2% applied to aircraft purchases would mean that the tax rate in Maryland is higher than many surrounding states.
As aircraft are highly mobile, it is likely that the increased tax rate caused by HB 1345 will force general aviation businesses to relocate to states with more favorable tax policies. While the purpose of the bill is to generate revenue for the state, the ability of aircraft purchasers to conduct transactions in neighboring states will likely eliminate much of the new revenue potential and lead to job losses in the general aviation sector.
Business Aviation in Maryland
Business and general aviation provide the following economic benefits to Maryland:
- According to the Maryland Aviation Administration, general aviation provides over 8,000 jobs in the state.
- According to the Maryland Department of Transportation, general aviation airports generate nearly $400 million in yearly economic impact.
- Maryland is home to over 3,500 aircraft and 8,000 pilots.
For additional information, contact NBAA’s Operations Service Group at (202) 783-9250 or [email protected].