Extending Federal Excise Tax on Airlines to In-Flight Services Amounts to a Money Grab

August 16, 2010

Some Congressional Democrats are looking to tax fees for blankets, headphones, movies and other in-flight services travelers may choose to purchase. Ironically, airlines "de-bundled" these costs from ticket fares in an effort to offer consumers more choices at lower prices. Now, federal legislation has been introduced to subject these fees to a 7.5 percent federal excise tax (FET), revenue from which goes into a trust fund dedicated to airport projects, employment and maintenance.

As Tax Foundation intern Ryan Forster explains in an op-ed published by the Orange County Register, the move is "an unjustified money grab by the federal government."

A passenger who decides to watch a movie, purchase headphones or buy a blanket does not use any more runway space or air traffic control services than the fellow in the next seat who doesn't buy any extras. Therefore both should pay the same tax to support airport operations.

The FET is not a general revenue raiser like a sales tax and shouldn't be applied like one. Especially if the add-on services "do not use the infrastructure that the tax is intended to pay for," Spirit Airlines Inc. President Ben Baldanza said in testimony at a House transportation subcommittee hearing last month.

Read the full op-ed, "New airline taxes should be grounded."

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