Obama Proposes New Transportation Fees, Taxes

Obama Proposes New Transportation Fees, Taxes September 21, 2011 - 02:35 PM ET By Lauren Darson President Barack Obama proposed new travel taxes and fees as part of his plan for economic growth and deficit reduction, which also dedicates several billion dollars to travel industry initiatives. Obama's plan would reform the aviation passenger security fee to "more accurately reflect the costs of aviation security," according to the proposal. The plan calls for the maximum passenger "per-enplanement" fee to increase to a minimum of $5 per one-way trip from $2.50. Passengers would pay the fee only "one time when traveling to their destination," according to the administration. The proposal eliminates the statutory fee limit, replacing it with the $5 minimum fee, which from 2013 annually will increase by 50 cents until 2017. The fee then would stand at $7.50, where it thereafter would remain. The move would cover roughly 43 percent of the Transportation Security Administration's security-related costs and generate an estimated $8.8 billion over five years and $24.9 billion over 10 years to be deposited in a general fund used to offset national debt and such TSA discretionary appropriations as security. The plan proposed air traffic taxes as well. For both general and private aviation, the plan would establish a mandatory $100 per-flight fee payable to the Federal Aviation Administration to cover its operational costs. This would generate roughly $11 billion over 10 years. Only military aircraft, public aircraft, recreational piston aircraft, air ambulances, aircraft operating outside of controlled airspace would be exempted. The Air Transport Association of America in a statement strongly opposed Obama's plan, claiming the new fees "would hurt economic recovery and further burden airlines and customers and cost jobs." "We oppose any new taxes on airlines or their passengers," ATA president and CEO Nicholas Calio said in the statement. "We already pay more than our fair share of taxes—more than the alcohol and tobacco industries, whose products are taxed at levels to discourage their use. Today, taxes and fees on a typical $300 round-trip ticket already account for more than $60 of the total cost." As for helping fund TSA, Calio said: "TSA costs are not all related to aviation. Yet, no other industry or mode of transportation pays for its security as airlines do, even though it is clear that the terrorists targeting commercial aircraft are not attacking the airlines themselves but rather the U.S. economy and the American way of life." Transportation Grants Obama's plan dedicates billions in grant funding to improve rail systems, airports and other transportation systems. The plan includes $9 billion to repair transit systems, of which $2 billion would improve intercity passenger rail service. Another $2 billion is designated for adding airport capacity and modernizing airport infrastructure. Furthermore, $10 billion is set aside for "innovative mechanisms" within the transportation industry, including $4 billion to develop high-speed rail corridors and $1 billion for NextGen air traffic modernization.