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NYT Warns That New Regulations Could Raise Air Fares by 0.4 Percent
The NYT had a piece discussing congressional actions to determine whether fees being tacked on by airlines are actually just concealed fare increases. If this is the case, then they may be allowing airlines to circumvent taxes that are based on air fares.
According to the article, such an effort to conceal fee hikes could be depriving airports of as much as $225 million a year in tax revenue. However, the article passes on the airlines' warning that if these fees were also subject to taxes, then this would be passed on to consumers.
How worried should consumers be about this prospect? Last year, consumers spent more than $50 billion on air travel, according to the Bureau of Economic Analysis. (This doesn't include business travel.) This means that if taxes on the fees were fully passed on to consumers, then it would raise fares by about 0.4 percent. Assuming business travelers shared the burden, the increase would be considerably less.
--Dean Baker
COMMENTS (2)
$255 million per year is small change.
The larger issue is that the Federal government pays for the FAA and TSA to the benefit of the aviation industry.
Here are just the October expenditures:
FAA $655 million
TSA $276 million
AATF ($646 - $369) = $277 million*
*The AATF is the Airport & Airway Trust Fund, and 277 million is the excess of expenditures over receipts from excise taxes.
FAA= Federal Aviation Administration.
TSA= Transportation Security Administration. 43,000 TSA employees work in the airports.
http://www.fms.treas.gov/mts/mts1007.pdf
Posted by: AndrewDover | November 14, 2009 10:29 AM
Why are you assuming that the airlines -- manager, pilots, other employees, shareholders, bond holders and other creditors -- will pay none of the taxes?
Posted by: DG | November 15, 2009 8:38 AM