In line with President Biden’s State of the Union Address promise to address tax disparities, the Biden administration has unveiled a proposal to substantially increase the federal tax on jet fuel for business jet operators over the next five years.
The proposed hike aims to raise the current tax of 22 cents per gallon to $1.06 by 2030, with estimates suggesting it would generate $1.1 billion in revenue over the five-year period.
The administration frames the fuel tax hike as a fairness issue, highlighting that while business aircraft account for 7 percent of the workload in FAA airspace, the current tax only contributes 1 percent of revenue to the federal trust fund for aviation and airports.
In contrast, airline passengers pay a flat $4.50 fee per flight and a 7.5 percent excise tax on fares, covering the remaining 99 percent of the fund.
President Biden emphasized the need to make private jet operators “pay their fair share” during his State of the Union Address, echoing the administration’s commitment to ending tax breaks for certain industries, including private jets and big oil.
Aviation groups swiftly responded to the proposed fuel tax hike and the broader budget proposal. NBAA President Ed Bolen expressed concerns about the potential impact on business aviation, emphasizing its importance as a business tool and highlighting that many passengers on private jets are mid-level managers conducting company business rather than ultra-rich individuals.
The National Air Transportation Association (NATA) echoed NBAA’s sentiments and raised additional concerns about the diversion of aviation tax revenue to highway projects. NATA President Curt Castagna emphasized the importance of properly allocating tax dollars to support the National Airspace System and ensure industry safety.
As the Biden administration pushes forward with its budget proposal, the debate over the fairness of the fuel tax hike and its potential implications for business aviation and the broader economy is likely to intensify.
