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Lawmakers revise jet fuel tax to include all airlines

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The state Senate budget committee approved changes to a proposed bill that would raise the gas tax on United Airlines to fund a $1.7 billion PATH extension to Newark Liberty International Airport by eliminating the exemption for a 4 cent-per-gallon tax on jet fuel.

At its Monday meeting, the committee voted 8-4 to amend Senate Bill 2892, sponsored by Senate President Stephen Sweeney, D-3rd District, so the increase would apply to all airlines that use Newark airport.

Currently, airlines are only taxed on the fuel their planes use during taxiing and takeoff, not during actual flight time.

Some opponents felt the legislation specifically targeted United, even though the bill does not mention the airline. The tax would have applied to any airline that carries over 8 million passengers a year, a distinction only United currently holds in the state.

“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.”

Tax revenue would not be limited to funding the PATH extension, said Senate Budget Chair Paul Sarlo, D-36th District.

Instead, the funds could be used towards any capital improvements at Newark airport, subject to approval under the capital plan of the Port Authority of New York & New Jersey.

Daniel Lynch, vice president for state and local government affairs at United Airlines, decried the proposed increase, saying that either way the airline would have to shell out another $20 million every year in business expenses.

“The mantra of New Jersey over the last months and years has been making the state more affordable and more competitive ... This legislation helps neither of those issues."

- Tom Bracken, president, New Jersey Chamber of Commerce

“I’m frankly puzzled about why we’re here before you today in an adversarial position,” Lynch testified. “We’re committed to being a good partner, investing in New Jersey’s economic future and working with our friends in organized labor.”

Lynch added that although United would have to assess the amendments, the Federal Aviation Administration outlaws the use of jet fuel tax proceeds for any purpose that is not strictly for aviation purposes.

“I think the state would have to be in negotiation with the FAA to make sure those funds are being used for their proper purpose,” Lynch said.

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, and on Monday testified that it would pile on more expenses to the cost of doing business in the state.

“United Airlines employs more than 14,000 direct employees and tens of thousands of indirect jobs, which make them the sixth-largest employer in the state of New Jersey,” said CIANJ Director of Government Affairs Tony Perry. “This legislation grows New Jersey’s regional disadvantage. Altering our tax structure would ultimately incentivize the airlines to have flights take off and land at New York airports.”

And Tom Bracken, president of the New Jersey Chamber of Commerce, said United has been asked to “pay their fair share many times over.”

“The mantra of New Jersey over the last months and years has been making the state more affordable and more competitive,” Bracken testified. “This legislation helps neither of those issues.”

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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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