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Massachusetts Aviation Caucus Letter

May 11, 2011

Representative Jay Kaufman & Senator Gale Candaras
Chairs of the Joint Committee on Revenue
State House
Boston, Massachusetts 02133

Dear Chairman Kaufman, Chairwoman Candaras, and members of the Committee:

I write on behalf of the Massachusetts Legislative Aviation Caucus to express our strong opposition to House Bill 2493 concerning the repeal of the exemption on sales tax of aircraft in the Commonwealth.

No doubt the bill’s sponsor means well and hopes to capture additional tax revenue so we in the legislature may spend it on worthy programs and services for our constituents. Unfortunately, the bill is short-sighted and would have certain immediate and unintended consequences.

First and foremost, the assets this legislation seeks to tax are among the most highly mobile there are: airplanes. In a state as small as ours, it is a simple matter of a short flight to a neighboring state in the Northeast with a tax climate more friendly to aviation and aviation-related businesses.  Tax the sale of one aircraft in our state and there will never be another aircraft sold here.  The aircraft owners and pilot community is small and tight. Word would travel like a jet.  It is too easy for a purchaser to cross our borders into a more friendly state.

Without aircraft sales in Massachusetts there would be few aircraft repairs.  High tech, high paying jobs would fly out of Massachusetts to follow the aircraft.  General aviation at the Commonwealth’s 39 airports would be severely and negatively impacted.

According to the National Business Aviation Association, “Aviation, unlike many other industries, is extremely mobile. Aircraft operators routinely travel hundreds of miles to have aircraft repaired or serviced. One of the criteria for determining where they will go is the overall cost of the repair. Maintenance sales tax plays a huge part of that decision.  In 2001, Massachusetts repealed its tax on parts and maintenance, which had a 2 year sunset clause. So effective was the repeal of that tax that in 2003, Massachusetts legislators overwhelmingly passed the Sales Tax Exemption on Aircraft Parts and Maintenance. What the legislators at that time witnessed was a resurgence of aircraft repair stations, an increase in aircraft registration by 40%, an increase in well paying jobs, and an increase in overall tax revenue.

“Neighboring states have realized the benefits of an aviation tax exemption on parts and maintenance. Just last week Connecticut legislators voted to continue with its tax exemption; Maine appears to be headed for the repeal of taxes on aircraft maintenance with the combining of two Bills last week; Rhode Island maintains a tax exemption on maintenance; New Hampshire has no tax and has just established an aviation trust fund. New York and New Jersey have maintenance tax exemptions as well. The bottom line is that with the repeal of the economically beneficial tax exemption on aircraft parts and maintenance, Massachusetts will be at a distinct economic disadvantage.

“Please consider that with the loss of jobs, in which this Bill will clearly result, not only are jobs lost, but so are the tax revenues on corporate income, personal income, sales tax on goods and services, aircraft registration as some operators along bordering states will move their aircraft, fuel, as well as indirect taxes for hotel stays, restaurants and automobile rentals or taxis (aircraft being mobile have found out-of-state operators bringing their aircraft to Massachusetts for repair).”

House bill 2493 would cost this state many of the 10,000 aviation-related jobs we currently have.

The Aviation Caucus and I have proudly stood up in support of our airports and aviation community and have sponsored several caucus meetings with actual pilots, aviation-related business owners, student aviators, and aviation enthusiasts to talk about the danger this very issue would pose to this important industry in the Commonwealth.

The Aviation Caucus would gladly make these individuals available for your committee members to speak with directly so that they may ask pertinent questions of real-world individuals about the impact of the repeal of the sales tax exemption on aircraft would have on them and our economy.

Feel free to contact me at your convenience and I would be happy to facilitate such a meeting. And, as always, your committee members are welcome at any Aviation Caucus meetings.

Thank you, most sincerely, for your time and consideration of my written testimony. 

I hope the bill does not pass.

Very truly yours,

Donald F. Humason, Jr.,
Westfield’s State Representative

Chair, Aviation Caucus