Advocacy Succeeds: Connecticut Passes Budget Without Aviation Tax Increases

May 4, 2011

Thanks to successful advocacy efforts by NBAA Members, the Connecticut Legislative Aviation Caucus and the Connecticut Business Aviation Group, the state will continue its role as an important location for business aviation. The House and Senate in Connecticut passed a budget that does not contain the potentially devastating tax increases for aviation that were proposed in earlier versions. The final budget, Senate Bill 1239 has been transmitted to the Governor for his signature.

Proposed Property Taxes Not Included in Budget

Proposals in earlier versions of the budget would have imposed a personal property tax on all aircraft based in Connecticut. Currently, aircraft based in the state are required to pay a yearly aircraft registration fee. Aircraft would have been taxed at 2% tax on the first 70% of the assessed aircraft value.

In most cases, the proposed property tax would have resulted in a significantly higher tax liability for aircraft based in Connecticut.

Current Aircraft Registration Fees

Gross Aircraft Weight (Pounds)
Fee

Less than 3,000
$90

3,000-4,000
$250

4,501-8,000
$700

8,001-12,500
$1,500

12,500 and over
$2,500

Proposed Personal Property Tax

Assessed Aircraft Value
Property Tax

$100,000
$1,400

$500,000
$7,000

$1,000,000
$14,000

$5,000,000
$70,000

$10,000,000
$140,000

If Connecticut based aircraft had been subject to personal property tax, many would have relocated to neighboring states such as Massachusetts and Rhode Island which do not have a property tax on aircraft.

Connecticut has spent significant dollars to improve General Aviation (GA) airports such as Waterbury-Oxford (OXC). This effort has paid off as nearly 200 GA aircraft are now based at OXC alone. If a property tax were to have been imposed, many aircraft would likely move out of the state threatening the 45,800 jobs in Connecticut that depend on aviation.

Additional Tax on Maintenance Not Included in Budget

Earlier versions of the budget would have made the following modifications to Connecticut’s current sales tax exemption for aircraft repair services performed in the state:

• Eliminates exemption from 6% sales tax on repair services for aircraft with a maximum certificated takeoff weight of less than 6,000 pounds.
• Repair services performed on aircraft with a maximum certificated takeoff weight of 6,000 pounds or more are still exempt from sales tax.
• The existing exemption on aircraft repair or replacement parts is not impacted by this legislation.

With over 100 repair stations located in Connecticut, aircraft operators often fly to Connecticut from other states to have repair work done and benefit from the favorable tax treatment. If the exemption had been eliminated, repair stations in Connecticut would have lost business to neighboring states such as Massachusetts or New York that have more favorable tax policies.

NBAA Action

NBAA worked directly with legislators and Connecticut based Members to oppose the harmful tax increases:

• Completed a survey to determine the economic impact if the property tax were enacted. The survey provides data on the number of aircraft that could move out of Connecticut; potential reduction in fuel sales; and possible job losses.
• Companies of various sizes based in the state have agreed to provide legislators with information on how the tax increases would negatively impact business or cause them to relocate aircraft.
• Individual legislators on the Revenue Committee have been contacted, but feedback from constituents located in the state is far more valuable

For additional information, contact NBAA’s Operations Service Group at (202) 783-9250 or info@nbaa.org.