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Aviation Groups Aim to Repeal Onerous Fuel Fraud Measure

A coalition of aviation industry associations are seeking repeal of an unnecessary and onerous fuel fraud provision that places an unreasonable burden on business owners, deprives the Airport Airway Trust Fund of much needed revenues, and raises costs for noncommercial jet fuel users.

At issue is a measure included in the nation’s last long-term surface transportation law that required taxes on noncommercial aviation jet fuel be collected at the highway diesel fuel rate (2.5 cents higher than the aviation jet fuel tax).

While the law permits noncommercial jet fuel suppliers to file claims with the IRS to reimburse the cost difference, due to the substantial administrative burdens this places on the providers, many simply choose to forego the paperwork hassle and pass the cost to consumers.

The law not only raised consumer costs, it also permanently deprives the Airport & Airways Trust Fund of $50 million annually, as the collected tax is kept in the Highway Trust Fund and only transferred to the aviation account if the fuel supplier submits a refund application.

The provision was implemented due to unfounded worries that highway users were using aviation jet fuel to avoid paying higher taxes; an illogical concern given that aviation fuel is more expensive than diesel and can cause substantial harm to diesel engines, providing no incentive to engage in such efforts.

ARSA supports efforts to repeal this onerous tax and encourages its members to do the same. Please visit www.ARSAaction.org to urge your lawmakers’ support for this matter.

~~~ posted 3/7/12 ~~~



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