Posted on January 16th, 2019
A story in the Pennsylvania Budget and Policy Center By Michael Wood, Research Director:
If you buy a car, a truck, a boat or any other vehicle in Pennsylvania, you pay sales tax. But if you are one of the few in the market for a Learjet or a Gulfstream aircraft, you would get a pass on paying that tax under a bill introduced in the state House of Representatives.
House Bill 1100 would exempt the sale of private and corporate aircraft from the state sales and use tax. At a time when average Pennsylvanians are bearing the brunt of cuts in education and other vital services, the bill effectively creates a $10 million to $14 million annual taxpayer subsidy for individuals who buy airplanes for recreational purposes and for corporations that upgrade jets for executives. While supporters of the measure say it would create jobs, aircraft would not need to be purchased in Pennsylvania to be eligible for the exemption. In fact, Pennsylvanians could purchase planes in Kansas (where most small aircraft are manufactured) or China (where the industry is moving more and more jobs) and pay no sales or use tax.
The legislation would also exempt aircraft repairs and parts from sales tax, creating another disparity in tax treatment for services. A car muffler would be subject to sales tax but not landing gear. At a time when Congress is scrutinizing special tax breaks and the public is clamoring to close loopholes, the House bill moves Pennsylvania in the wrong direction with this luxury tax break.