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Policy: Budgets & Deficits

Hiking taxes on air passengers so government can spend more is wrong

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Transportation,Op-Eds,Taxes,Budgets and Deficits,Spending,Sequester

Congressional budget negotiators may be closing in on a limited agreement that would provide relief from the fiscal drama of the past few years.

Unfortunately, they are doing so at the expense of air travelers and in a way that significantly increases federal spending — precisely the wrong direction.

What’s being proposed is a permanent tax increase that would provide temporary relief from scheduled spending cuts. In other words — raise taxes so the government can spend more money.

The budget deal relies heavily on doubling the Transportation Security Administration's “fee” from $2.50 to $5 per ticket. Let’s call that what it is — a tax increase.

The extra revenue generated would be used to boost overall government spending by billions of dollars a year. This does not solve our budget problems, but merely kicks the can down the road.

What’s worse, the proposed tax increase is regressive, which means that people who are least able to pay the increase are disproportionately harmed by it.

Airline passengers and the industry in general are already overtaxed. Since 1990, the number of aviation fees has increased from six to 17 and the total amount paid has grown annually from $3.7 billion to $19 billion.

Over the past four decades, the tax burden on a typical $300 round-trip ticket has nearly tripled from $22 to $61.

For many consumers and businesses, even the smallest change in the price of a ticket can have a negative impact on their travel decisions.

The Government Accountability Office has reported that for every dollar increase in airfare, the demand for travel drops by nearly 2 percent. The proposed security tax hike would reduce demand, which harms the economy and jobs.

Perhaps the most disturbing fact about the impending budget agreement is that the new revenue to be collected would not even be used by the TSA to improve service for passengers.

Rather, the extra revenue would enable more spending across the entire federal government. It’s a classic bait-and-switch.

The fact is TSA doesn’t need any more revenue. From 2007 to 2013, Congress increased the TSA budget 19 percent. Yet the number of people screened dropped 11 percent — or 75 million people — during this period.

Why should one industry and its customers be singled out to pay for more government spending? The answer is: They shouldn’t.

Airlines and their passengers are a vital economic engine for our country. It is often said that if you tax something, you will get less of it. That is exactly what will happen if this budget agreement is approved.

Nicholas Calio is president and CEO of Airlines for America.
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