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President Joe Biden has proposed a significant increase in private jet fuel taxes, but his administration has pitched it as a matter of fairness with airline passengers, who pay a special tax on each ticket.
The proposal was included in a $109.3 billion budget request for the U.S. Department of Transportation announced Monday.
It is unclear how this proposal will fare in Congress. Much of Biden’s budget proposal will pass in the Republican-controlled House. The largest business aviation trade group has voiced opposition to the targeted fuel tax hike, saying private jets help businesses succeed and create jobs.
The White House has allocated about $22 billion to the Federal Aviation Administration, including hiring at least 2,000 new air traffic controllers and updating aging FAA facilities that FAA Administrator Mike Whitaker says are on average 40 years old. It also includes funds for Democrats and Republicans in Congress have supported expanding the FAA’s hiring of air traffic controllers and safety inspectors.
The budget will also include $62 billion for roads and bridges and $3.2 billion for rail infrastructure, inspections and the Amtrak passenger rail system.
The budget would gradually raise taxes on fuel used by private jets from the current rate of about 22 cents a gallon to $1.06 a gallon over five years. The Department of Transportation says the increase will help stabilize funding for the FAA’s national airspace management, which is primarily paid for by airline passengers.
Airline passengers pay a 7.5% excise tax on their tickets and an additional levy of up to $4.50 per flight to fund airport projects.
The administration says private jets account for 7% of all flights handled by the FAA, but less than 1% of tax dollars fund the federal trust fund for airlines and airports. The Department of Transportation announced that the proposal would raise $1.1 billion over five years.
Biden hinted at the proposal in his State of the Union address last week, shortly after calling for raising the minimum income tax on corporations.
“I also want to eliminate tax breaks for big pharmaceutical companies, big oil companies, private jets, and huge executive salaries,” he told Congress.
Ed Bolen, president of the National Business Aviation Association, said Mr. Biden was being unfair.
“Business aviation is an essential industry to America’s economy and transportation system,” he said. “It supports jobs, brings communities together, helps businesses succeed and provides humanitarian aid in times of crisis. This is an industry that should be promoted, not shamed.”
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