State Tax
Lawmaker Leads Effort to Repeal Pennsylvania's Aircraft Sales & Use Tax
January 23, 2012
“It’s an archaic tax, a regressive tax, and it doesn’t generate that much revenue for the state of Pennsylvania,” said state Representative Peter Daley about the sales and use tax on aircraft and maintenance.
Pennsylvania is one of the only states in the Northeast region that do not have a sales-and-use tax exemption for aircraft maintenance. Recognizing that airplanes are highly mobile and can go to neighboring states for maintenance, Rep. Daley has sponsored a bill, HB 1100, to exempt aircraft sales and maintenance from Pennsylvania sales and use tax.
“This bill would put Pennsylvania in a competitive position in regards to neighboring states,” said Daley, who represents parts of Washington and Fayette counties in Southwestern Pennsylvania. “Its biggest impact will be to create jobs here, in our state, in the aircraft maintenance industry.”
The tax has indeed held back the aviation services industry in Pennsylvania. There are no major fixed-wing maintenance facilities in the Keystone State, no paint shops and very little overhaul work is done there.
“Most Pennsylvania based fixed-wing aircraft go to a neighboring state when it’s time for service because our tax policy has slowly strangled the very kinds of small businesses that perform maintenance, repair and overhaul [MRO] work,” said Craig Stephan, vice president of Cheyenne Air Service, based on Washington County Airport (AFJ). “For the most part, MRO businesses are nearly extinct in Pennsylvania.”
Daley cited a 2010 study, which found that Pennsylvania lagged far behind its neighbors to the north and west: While New York employs 9,400 people in aviation maintenance and Ohio 8,300, Pennsylvania employs only 2,900. This is despite the fact that all three states have roughly the same number of general aviation (GA) airports.
“There’s a large potential for aircraft maintenance businesses to relocate or open new operations in the Commonwealth,” said Daley. “That’s going to create jobs here and raise revenue for the state through higher income tax and fuel tax receipts.”
With 69 cosponsors from both sides of the aisle, Daley’s bill has been approved by the Pennsylvania House Finance Committee and is poised for consideration by the whole House of Representatives. To move the bill forward, Daley and NBAA Regional Representative Dean Saucier said, now is the time for legislators to hear from GA operators in Pennsylvania.
Local operators are encouraged to learn more about the bill, contact their representatives in the state legislature and urge them to support it.