March 18, 2016

Idaho Gov. Butch Otter has signed into law HB 361, which makes permanent a sales tax exemption on aircraft parts for out of state aircraft that was first put in place in 2012.

“NBAA applauds passage of HB 361 as it extends the exemption on aircraft parts which has succeeded in helping the state’s 30 repair stations continue their growth,” said Scott O’Brien, NBAA senior manager of finance and tax policy. NBAA, along with the Idaho Business Aviation Association (IBAA), supported the initial sales tax exemption measure in 2012. The groups worked together again this year, urging legislators to make the exemption permanent.

The measure has positively impacted Idaho’s 30 FAA Repair Stations, according to Peter Woodke, contracts manager at Western Aircraft in Boise. The 6 percent sales tax companies were required to collect on aircraft parts prior to 2012 made it difficult for companies like Western to compete in a market where more than 90 percent of its customers come from out of state, he said.

“Our margins on parts are pretty low to begin with,” Woodke said. “Not having to pay sales tax is a remarkable game changer for both Western Aircraft and its customers. Removing the sales tax on parts allows us to compete on a level playing field in the marketplace.”

In a survey of the state’s 30 Repair Stations, 90 percent said they reaped benefits from the temporary measure and believed those benefits would continue if the exemption was made permanent. For example, Western Aircraft built a new parts facility and infill building and hired 26 people as a result of the 2012 exemption, said Woodke.

“Since 2014, seven states have either passed or expanded sales tax exemptions for aircraft parts,” said NBAA Northwest Regional Representative Kristi Ivey. “By passing HB 361, Idaho’s legislators and its governor have once again demonstrated they recognize how important it is to maintain a favorable tax environment in which business aviation can thrive.”

View NBAA’s letter in support of the bill. (PDF)