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Lawmakers seek to close United tax break; airline says it may look to other hubs

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Senate Bill 2892 would raise taxes on United Airlines in order to help finance the extension of the PATH Train to Newark Liberty International Airport.
Senate Bill 2892 would raise taxes on United Airlines in order to help finance the extension of the PATH Train to Newark Liberty International Airport. - ()

State lawmakers are moving forward with a plan to raise taxes on United Airlines in order to help finance the extension of the PATH Train to Newark Liberty International Airport.

The proposed Senate Bill 2892, sponsored by Senate President Stephen Sweeney, D-3rd District, was approved by a 4-1 vote in the Senate Transportation Committee on Thursday.

United Airlines employees and union members opposed to the measure packed the committee room, with many having to be led out of the room by security.

The bill doesn’t explicitly mention United, but instead applies to any airline that carries over 8 million passengers a year, a distinction only it currently holds in the state.

Current law only taxes the jet fuel burned during takeoff, landing and while over New Jersey airspaces. Proponents of the measure point out, for example, the state would only see a slither of revenue from a flight traveling thousands of miles from Newark to Europe.

Under the increase, airlines would pay four cents per gallon for fuel purchased in New Jersey.

“Removing the exemption that effectively limits surcharges on fuel used for takeoffs and landings will bring New Jersey in line with the practices of most other states,” Sweeney said in a prepared statement. “This is a legitimate and effective means of funding upgrades and improvements to a system that provides direct services to the airport.”

The tax revenue would finance the PATH extension to the Newark Liberty International Airport station along the Northeast Corridor Rail and create a new station in Newark’s South Ward.

Jill Kaplan, president of the New York/New Jersey region for United Airlines, said the plan is unlawful under Federal Aviation Administration’s guidelines, which she said mandates that jet fuel taxes can’t be used for non-aviation purposes.

But Senate Transportation Chair Patrick Diegnan, D-18th District, reasoned the proposed use of funds is lawful, and Sweeney said he expects the FAA to “recognize the importance of this proposal” and provide any necessary support.

Kaplan also noted United is one of the largest employers in New Jersey, with 14,000 workers, and has made billions of dollars in capital investment into the airport and state.

“I’m puzzled,” she testified. “We are committed to being a good partner, investing in New Jersey’s future and working with our friends in organized labor.”

The New Jersey Chamber of Commerce, Commerce & Industry Association of New Jersey and New Jersey Business & Industry Association all came out in opposition of the bill, saying it would pile on more expenses to the cost of doing business in the state.

“Employers are currently working to become compliant with new laws such as equal pay, paid sick leave and the changes to the way they file taxes,” Michael Egenton, executive vice president of the chamber, said in a written testimony. “After the corporation business tax and with the eventual increase in minimum wage, businesses cannot take another hit to their bottom line.”

Kaplan said the tax increase would put the state at a competitive disadvantage with neighboring states such as New York and Pennsylvania.

"United has six other hubs, including another on the East Coast at Dulles International Airport in Virginia," Kaplan said. "So we have choices about where we grow and if this additional and discriminatory tax scheme becomes law ... my profound concern is that increasing costs could stunt United's future investments at Newark and in turn New Jersey, curtailing our vision for growth, leading to few flights and less job growth."

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Daniel J. Munoz

Daniel J. Munoz

Daniel Munoz covers politics and state government for NJBIZ. You can contact him at dmunoz@njbiz.com.

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Weequahic Fights Back September 24, 2018 4:42 pm

Why isn't the Port Authority funding the PATH extension? They operate the PATH system...

John September 13, 2018 3:27 pm

NJ just wants to tax everyone out of the State. Last person to leave, please turn out the lights!!

Ridger September 13, 2018 3:30 pm

Soon United will move its hub because there won't be anymore businesses in NJ.

Jackson September 13, 2018 3:37 pm

Don’t mess with United. Transportation is a key economic driver for this region. Easy in and out serviced by four major airports in NYC (2), EWR, and PHL, and all major carriers means a lot to our economy. Be fair but keep United at EWR.

Robert R September 13, 2018 3:51 pm

Enough is enough already...........They mismanage the state finances as far back as any one can remember and now they want the businesses and taxpayers to bail them out.

Joe Simiriglio September 13, 2018 6:45 pm

I would tax airlines 10% for each bag that a consumer is charged $25.00 or more,which is not a carry on bag. NJ lawmakers should tap into the tipoff fee charged to passengers with luggage too big to be categorized as carry-on. The fee would be a good tax for a change

Michael Falcone September 13, 2018 8:01 pm

A really stupid and shortsighted move!
Sweeney strikes again.