DALLAS — States are losing more than $1 billion a year by giving tax breaks to airlines on sales of more than 12 billion gallons of jet fuel used in commercial aviation, the Unite Here International Union said in a 50-state report released Monday.
The tax breaks vary from state to state, said Adam Yalowitz of 12billion.org, the union's Chicago-based airline tax policy group.
"In some states, airlines only pay tax on fuel used during takeoff," Yalowitz said. "Other states exempt airlines' fuel from environmental taxes or for multi-leg flights that originate domestically and continue abroad."
The 12.billion.org group is not advocating any legislative changes to state tax laws at this point, Yalowitz said.
"We just thought it was interesting that the airlines are complaining right and left about how they are over-taxed, while at the same time they're getting these huge tax breaks at the state level," he said. "The airlines have gone state by state seeking these exemptions, which are significant."
The state-by-state analysis shows 35 states offer airline-specific tax breaks, while only 12 don't provide some level of fuel tax relief to airlines. Texas does not tax jet fuel, New Mexico provides a tax break on all jet fuel sold, and Delaware has no commercial aviation facilities.
California has the largest loss of potential revenue, the study said, forgoing $384 million of tax revenue a year on sales totaling 2.3 billion gallons of jet fuel. International flights are exempt from the state fuel tax even if they stop at another U.S. city on the way, at a cost to the state of $310 million. California loses another $74 million by exempting airlines from the state fuel excise tax of 2 cents per gallon.
New York exempts airline jet fuel from the state sales tax, which costs it $64 million a year but the revenue drop totals $220 million if lost local tax collections are included. Airlines pay the New York state fuel tax only on the fuel used for taxiing and takeoffs, at a cost to the state estimated at $50 million a year.
Airlines continue to press for additional tax breaks, Yalowitz said.
The Michigan Senate this fall will be considering a fuel tax break of up to $27 million a year sought by airlines, he said. American Airlines earlier this month asked North Carolina lawmakers to extend a fuel tax break that is set to expire in 2016.
Airlines and passengers already pay more than their fair share of federal and state taxes, said Vaughn Jennings, a spokesman for Airlines For America, a commercial aviation advocacy group.
Airlines pay federal taxes totaling $52 million a day, he said, and billions more a year in state and local levies.
"States that have a lower tax burden on airline jet fuel do so because they recognize that despite these hefty tax burdens, the industry helps create 11 million U.S. jobs and $1.5 trillion in economic activity and because economists discourage taxation of business inputs, which are different from retail sales," Jennings said.
Base airline fares have fallen an inflation-adjusted 8% since 2000, according to Airlines for America, while taxes are up more than 49% over the period.
The average round-trip ticket in the U.S., including taxes, totaled $509.15 in the first six months of 2014, the Airlines Reporting Corp. said earlier this month.
The federal government also provides a tax break on jet fuel sold to airlines.
The federal tax on jet fuel is 21.9 cents per gallon, but the levy drops to 4.4 cents for commercial aviation purchasers. The federal tax on aviation gasoline used by small private aircraft is 19.4 cents per gallon.
Revenue from the federal tax on aviation fuels helps fund the Federal Aviation Administration's airport grant program and air traffic control systems.
