Citing high fuel costs for the airlines in the wake of Hurricane Katrina, the U.S. government is mulling a temporary suspension of the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. on airline tickets. From CNN Money:
Regulators are considering a suspension of the 7.5 percent ticket tax paid by airline passengers, a move that would help carriers more easily raise fares and recoup some losses blamed on soaring fuel prices, Transportation Secretary Norman Mineta said Wednesday.
In a conference call with reporters, Mineta said he had recently discussed the idea with senior airline industry officials and said it was something the agency was exploring even though it would remove a key source of revenue from the trust fund that pays for air traffic services.
Another temporary tax relief proposal. Temporarily removing a revenue source now without cutting spending merely means that you, the taxpayer, will pay for it in some other form down the road. It may just be in the form of higher taxes elsewhere, like income, or higher deficits; and it means that the burden may be shouldered by someone else.
These rising fuel costs are part of a whole host of problems that airlines have faced over the past decade. It’s not just because of Hurricane Katrina that airlines are in financial trouble. Recall that the government bailed out many of these carriers four years ago, some of which have subsequently filed bankruptcy.
If the government truly cared about saving the airline sector, it should have permanently removed the high tax on airline tickets years ago. Instead, they imposed more taxes on airline travel in the form of 9/11 security fees.
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