Feb. 5, 2016

NBAA strongly supports a Maryland bill that would exempt aircraft repair and upgrade parts from sales tax, saying that without the repair exemption, the state is at a competitive disadvantage to other neighboring states.

“The exemption proposed in SB14 is sound tax policy that will lead to increased aircraft repair business by exempting from the state sales and use tax parts and equipment used to repair, maintain or upgrade aircraft,” said NBAA’s Senior Manager of Finance and Tax Policy, Scott O’Brien. “Maryland already has 24 FAA-certified repair stations and over 2,500 active general aviation aircraft.

“Since aircraft are highly mobile, the fact that Maryland does not offer a similar exemption makes it less competitive,” explained O’Brien. “Surrounding states have an exemption for aircraft repair parts and labor, which encourages companies to set-up maintenance, repair and overhaul facilities in those locations.”

Members have reported to NBAA that the sales tax policies in a specific state are a key factor they consider when making decisions about where to base their aircraft or have repair work done. In states such as Ohio and Massachusetts, studies have proven that targeted aviation sales tax exemptions generate jobs and economic growth.

“Overall, this exemption will be a boost to Maryland’s economy,” said O’Brien. “The possibility of any lost revenue will be offset by the creation of high-paying jobs, increased spending by companies that are in Maryland for repairs, as well as increased investments in the state’s airports, among other future benefits.”

NBAA members in Maryland are encouraged to contact their state elected officials and express support for the exemption. O’Brien said the Senate Budget and Taxation Committee will likely vote on the proposal in a closed meeting sometime before March 15, the deadline for committees to report bills.

The companion bill, HB0313: Sales and Use Tax – Aircraft Parts and Equipment – Exemption, is scheduled to be heard by the House Ways and Means Committee later this month.

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