It’s compromise in New Jersey: all airlines will be taxed, not just United Airlines.
Earlier this month I wrote about United’s threat to abandon its Newark Liberty International hub due to a proposed fuel tax increase from the Garden State that exclusively targeted United Airlines.
> Read More: United Threatens To Abandon Newark Hub
United’s threat was likely never credible, but it still invoked a fierce discussion over taxes and equity. At the time, the New Jersey Plan included a plan to begin taxing all airline fuel at New Jersey airports for airlines that carried over 8 million passengers per year from New Jersey. That excluded all airlines but United, prompting this stern warning:
If this additional and discriminatory tax scheme becomes law, it is my profound concern that this will impact our ability and stunt our ability to invest in future investments at Newark and in turn New Jersey.
Whether because of United’s protests or simply as a way to raise more revenue, New Jersey has decided to tax all airline jet fuel, not just the fuel of those airlines that transport more than 8 million passengers per year.
Passage is not a sure-thing, but seems probable. Per Bloomberg:
The bill must be passed by the legislature and signed by the governor to become law. New Jersey’s Democratic-controlled legislature in June approved a $37.4 billion budget that raised or placed new taxes on corporations, those with incomes exceeding $5 million and companies that provide car-sharing services and liquid nicotine.
CONCLUSION
New Jersey has never seen a tax it didn’t like, but at least it is taxing all airline equally. This should shut United up and hopefully the result will be an extension of the PATH train to Newark Airport, even with a healthy dose of graft to slow down the project.
Let’s see if any other airlines decide to protest the new tax…
image: qwesy qwesy / Wikimedia Commons
Endless environmental impact studies, lawsuits, and public contract bidding disputes will triple the cost of the PATH extension. Here’s a spoiler (as opposed to a prediction) the legislature will find another use for the revenue long before the PATH extension is operational.
Without getting in the merits of the tax itself, applying the tax to everybody seems like a much fairer way to implement it. And I’m with Chris – don’t hold your breath on the PATH extension. New Jersey will find plenty of other uses for the revenue long before the project even gets to the public hearing stage.
Isn’t aviation fuel under the jurisdiction of the Federal government and the only way jet fuel can be taxed is that its specifically used for the improvement of the airport?
My understanding is all that revenue collected at an airport through taxes, rates, and charges, have be used on airport. Taking revenue off airport for a non-aviation/airport purpose is revenue diversion and is illegal. Though I believe PANY/NJ have some grandfathered exemptions. And even though the proposed PATH train would benefit the airport, if it makes stops between EWR and Central Station (or wherever its going) then it would also benefit the local community so it couldn’t be solely funded by airport taxes.