Legislative Testimony for LB440: Increase a tax on aviation jet fuel

Good Afternoon members of the Revenue Committee.  My name is Sarah Curry, and I am here to testify in opposition to LB440.
 

During the last few months this committee has discussed numerous tax proposals, but I think we have all agreed upon the fact that taxing business inputs is bad tax policy and should be avoided at all costs.  In this case, aviation jet fuel is a business input, and a quite significant one.  Jet fuel accounts for between 20 to 40 percent of airline operating costs, which is typically passed along to the consumer through higher prices.
 

This taxation of business inputs is referred to as “tax pyramiding” which directly translates into higher costs for consumers and less transparency in the true cost of the product.  Just last year, US Airline CEOs sent a letter[i] to the US Department of Transportation urging the federal government to stop increasing the taxes and fees on the airlines because these costs consume over 20 percent of the average round trip airline ticket.  Aviation is already subject to 17 unique taxes and fees imposed by the federal government.
 

Increasing the Nebraska jet fuel tax will put Nebraska at a disadvantage to her neighbors in the Midwest.  Many transcontinental flights will stop in the Midwest to refill their planes.  If this tax were to go into effect, we would see more air travel go to Kansas to refill their planes due to their extremely low tax on aviation jet fuel rather than Nebraska.
 

Most states avoid taxing aviation jet fuel altogether by not including it in the sales tax base.  We have seen a movement across states since 2015 to suspend or to eliminate their aviation jet fuel excise taxes in efforts to create more pro-growth environments, especially in states with major airline hubs.  Nebraska does not need to move in the other direction by increasing barriers to the aviation industry with higher taxes.
 

Vince Dugan, the president of Nebraska based Trego/Dugan Aviation, Inc., spoke with me about the impact this tax would have.  He was unable to be here today, so he submitted a letter outlining his concerns about this tax.  He also included a table showing the components and current tax levels of aviation jet fuel in Nebraska and our surrounding states.  I have included that table with my testimony.
 

Thank you and I’m happy to take any questions.
 

 

 

State

Motor Fuel

Clean up

Environmental

Inspection

Load Fee

Lust

Total

Nebraska

0.030000

0.003

0.033000

South Dakota

0.039400

0.02

0.059400

Iowa

0.049825

0.01

0.059825

Missouri

0.0007

0.0035

0.004200

Kansas

0.0003

0.000300

Colorado

0.040000

0.040000

Wyoming

0.040000

0.01

0.050000

 

 

 

 

 

 

 

 

Nebraska with LB440

0.100000

0.003

0.103000

 

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