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Aviation Community Welcomes Indiana’s New, Economy-Boosting Tax Policy

July 18, 2013

Indiana is home to 69 public-use airports and more than 100 maintenance facilities, fixed based operators, flight schools and other aviation businesses. Those companies support more than 69,000 jobs in the Hoosier State, contributing more than $14 billion to the economy.

Until recently, a 7-percent state sales tax on aviation fuel and maintenance meant those businesses operated at a significant cost disadvantage compared with surrounding states. That changed on July 1, when new legislation went into effect replacing the state sales tax on aviation fuel and maintenance with a flat 10-cents-per-gallon excise tax on fuel purchases.

The resulting cost savings to operators allows businesses in Indiana to better compete with surrounding states, which in the past have capitalized on Indiana's high taxes.

"We're extremely excited about the future, as word gets out that Indiana is now price-competitive," said Bart Giesler, executive director for the Aviation Association of Indiana.

Giesler noted the sales tax exemption is the result of an effort that began with the 2012 passage of a tax exemption on parts used in the outfitting and maintenance of foreign-registered aircraft. "Lawmakers knew then that other Indiana aviation businesses were at a disadvantage but didn't have enough details to proceed with additional exemptions," he said.

Several entities responded to that call, with pilots, advocacy organizations – led by the Aircraft Owners and Pilots Association – and others rallying support for the tax exemption. By the start of the 2013 General Assembly session, lawmakers had significant evidence before them of not only the importance of aviation to Indiana’s economy, but also of how the state sales tax was hindering those businesses. They acted quickly to change the policy.

"The Indiana state government did a great job in making this a 'fly-to' state, instead of a 'fly-over' state," added Tom McCord, general manager and aircraft sales at Tom Wood Aviation, located at Indianapolis Metropolitan Airport (UMP). "We're looking forward to seeing more airplanes, which means hiring more people, and further bolstering aviation's many contributions to our state."

Highlighting the many social, economic and humanitarian benefits of all general aviation, including business aviation, is also the core mission of the No Plane No Gain advocacy campaign, which is jointly sponsored by NBAA and the General Aviation Manufacturers Association. NBAA Central Regional Representative Bob Quinn noted Indiana serves as a textbook example of the importance of grassroots advocacy efforts.

"Once lawmakers and other officials are presented with evidence of aviation's importance, they quickly realize the benefits of supporting the industry and are eager to find constructive and thoughtful ways to do it," Quinn added. "It's a simple idea, but also one that carries significant resonance."