In fiscal year 1996, nearly three-quarters of the Federal Aviation Administration's (FAA) funding came from the Airport and Airway Trust Fund, and the balance came from the General Fund of the U.S. Treasury. Since its creation in 1970, the Trust Fund's primary source of revenue has been a tax on domestic airline tickets. Currently, the tax is 10 percent of the fares paid. While relatively easy to administer, the ticket tax has been challenged by the nation's largest airlines as unfair in a deregulated environment where other competing airlines often charge much lower fares. The government's authority to collect the ticket tax lapsed on December 31, 1995. In May 1996, a coalition of the seven largest U.S. airlines proposed replacing the tax with user fees, which they believe would more accurately charge each airline for the costs that its operations impose on the airport and airway system. In August 1996, the Congress reinstated the ticket tax through December 31, 1996, when it will lapse again. FAA estimates that the money available in the Trust Fund at the end of the year will be sufficient to finance the Trust Fund's portion of FAA's budget until early July 1997. You asked us to examine the issues raised by the coalition's proposal, including (1) whether the ticket tax should be replaced by a different fee system, (2) what the potential competitive impacts of the fees proposed by the coalition airlines would be, and (3) what factors need to be considered if a new fee system were to be developed. Also, at your request, we have updated our April 1996 report on the status of the Trust Fund, including the implications on FAA's budget of reinstating or not reinstating the taxes that finance the Trust Fund.
Airport and Airway Trust Fund: Issues Raised by Proposal to Replace the Airline Ticket Tax
1996
24 pages
Report
Keine Angabe
Englisch