Robbing Peter to Pay Paul

by NATA Director, Regulatory Affairs – Michael France

Just this week, the Government Accountability Office (GAO) released a report that raised concerns with the Federal Aviation Administration’s (FAA) method for forecasting revenues coming into the Airport and Airway Trust Fund. The bottom line, according to the GAO, is that the FAA has consistently overreached in forecasting annual revenue coming into the trust fund, leading to a steady decrease in the amount of uncommitted funds remaining in the account. 9 of the past 11 annual forecasts were not realized once actual revenue was calculated, causing the uncommitted balance of the trust fund to decrease from $7 billion in 2000 to $770 million in 2010. As the uncommitted balance continues to decrease, it becomes increasingly likely that the general revenue share of the FAA’s budget would need to increase in relation to the amount allocated from the trust fund. In a time of staggering government budget deficits and debt, relying on funding from general revenue for vital airport development, safety and modernization projects is foolhardy.

Why then is Congress allowing cash to be siphoned from the Airport and Airway Trust Fund into the Highway Trust Fund every year? Yes, I am referring to the so-called fuel fraud tax. This monstrosity of legislation and regulation places taxes paid on aviation fuel in the Highway Trust Fund until FBOs and other retail aviation fuel providers complete a complex and expensive process of filing for a refund from the Internal Revenue Service; all for the supposed purpose of preventing users of on-road diesel fuel from going to airports and buying jet fuel for their trucks or other equipment to avoid paying a 2.5-cent-per-gallon higher tax on the diesel fuel. Never mind that jet fuel retails for $2 to $4 more a gallon than diesel fuel. I guess we are supposed to believe that there are truckers who would rather pay a higher retail price just so they can say they avoided paying the extra two-and-a-half-cent tax on diesel fuel! In reality, all the fuel fraud tax does is transfer funds that should be going into the Airport and Airway Trust Fund to the Highway Trust Fund to the tune of $50 million per year (that and impose a huge financial and administrative burden on FBOs).

While getting rid of the fuel fraud tax would not solve the forecasting problem addressed by the GAO’s recent report, it would initiate an immediate and annual increase in the Airport and Airway Trust Fund’s bottom line. This increase would be in real dollars, not just FAA forecast amounts.

NATA believes that it is time for the fuel fraud tax to go. We ask that you contact your Senator and Congressman and support our efforts to get rid of the fuel fraud tax — no more robbing Peter to pay Paul!

Click here to view NATA’s Action Call on abolishing the fuel fraud tax.

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