US passengers face $US2.7 billion tax hike in Trump budget

February 11, 2020
tax budget airlines
President Trump. Photo: BBC

US airlines have called on Congress to reject passenger tax increases worth $US2.7 billion in President Trump’s fiscal 2021 budget request.

Airlines For America (A4A) said the $US2.7 billion impost would be in addition to $US26 billion passengers paid in 2019.

The lobby group said a recent survey found that almost 90 percent of Americans had flown on an airline some time in their lives and 42 percent of them had family incomes under $US75,000.

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It noted US aviation and its customers were already subject to 17 federal aviation taxes and fees.

“Increasing taxes in any form would burden families with higher costs to fly, curtail job growth and limit air service options to small and rural communities,’’ it said.

The higher fees proposed in the budget request include increases to the Transportation Security Administration Passenger Security Fee, the Customer User Fee and the Immigration User Fee.

The budget proposes increasing the passenger security fee by 18 percent to $US6.60 in the 2021 financial year and then an additional 25 percent, to $US8.25, in fiscal 2022.

“This proposal would increase taxes on passengers by an estimated $US618 million in FY2021 and $US22.3 billion between FY2021 and FY2030,’’ A4A said.

The customs fee increase would see a 34 percent rise, from $US5.89 to $US7.89, to reap additional taxes estimated at $US431m in FY2022 and $US2.4 billion by FY2030.

The immigration fee would go up 29 percent to $US9, increasing taxes on passengers by an estimated $US376 million in FY 2021 and $US2.2 billion by FY2030.

A4A  also echoed airline lobby groups in other countries by calling on Congress to end the practice of diverting security fees away from security to pay for deficit reduction.

“Since 2014, approximately $1.3 billion per year in TSA fees has been diverted away from its intended purpose, which is to pay for aviation security screening,’’ it said.

“ Similar diversions have also been used for Customs and Border Protection (CBP) fees.

“Instead of increasing taxes, there should be a focus on addressing the annual diversion of billions of dollars of security funds.”