April 25, 2011
Under current state law, if you bring your aircraft to Maine for more than 20 days in the first year after purchasing it in another state, you could get hit with the state’s 5 percent use tax.
“That’s a huge boogeyman out there in the industry,” said Nate Humphrey, CEO of Twin Cities Air Service, a fixed base operator (FBO) and charter service on Maine’s Auburn-Lewiston Municipal Airport (LEW). “The perception is, ‘Don’t fly your aircraft to Maine; you’ll get hit with use tax.'”
“Even if operators are not affected by the use tax, the perception is Maine is unfriendly to aviation business,” said Steve Levesque, executive director of Maine’s Midcoast Regional Redevelopment Authority.
That perception is one of the toughest challenges Levesque faces in his role. His office is dedicated to transforming the soon-to-be-closed Naval Air Station Brunswick into a thriving business hub centered around the new Brunswick Executive Airport (BXM). “Whenever I go to a trade show or conference to attract aerospace business to Brunswick, people bring it up,” said Levesque, “They say, ‘Maine? That’s the state with the awful use tax.'”
Pro-Business Legislation in the Works
All that may be changing, thanks to two bills introduced this month: one that would remove the limitations on aircraft use during the 12 months after purchase (LD 946) and another that would expand the current sales tax exemption for turbine powered aircraft over 6,000 pounds or aircraft used by a Part 135 operator to all aircraft (LD 1096).
The bill to lift the use tax on nonresidents (LD 946) was introduced by Sen. Stanley Gerzofsky (D), who represents Brunswick, demonstrating he understands that attracting more aviation business to Maine means attracting high-paying jobs. For example, startup turboprop manufacturer Kestrel Aircraft, launched by Cirrus co-founder Alan Klapmeier, plans to establish its headquarters at Brunswick Executive, creating as many as 300 new jobs.
The change in the tax law could be a huge boon to Maine’s aviation industry.
“Until now the new and used aircraft market has been virtually nonexistent in Maine,” said Mark Goodwin, vice president of Northeast Airmotive, an FBO and repair station on Portland International Jetport (PWM). “This tax exemption isn’t a giveaway to companies that are already here; it’s about enticing business to come to Maine that isn’t coming now. Today, most operators are stopping at the border and buying parts and maintenance in New Hampshire. This legislation could bring many times the number of business aircraft to Maine as are here now – and with each one, at least three high-paying jobs.”
For additional information, contact NBAA’s Operations Service Group at (202) 783-9250 or info@nbaa.org.
International Business Aviation Council Ltd.