March 28, 2019
Florida-based manufacturers Embraer and Piper recently voiced their support of pending sales-and-use tax reform. Florida state legislators are currently considering Senate Bill 580, which would reduce the sales-and-use tax rate on aircraft from 6 percent to 4 percent, making Florida more competitive with surrounding states.
In a recent letter to state Sen. George B. Gainer, chairman of the Committee on Tax and Finance, Embraer Aircraft Holding Company President Gary Spulak pointed to South Carolina, where aircraft sales tax is capped at $500 and Alabama, which has a 2 percent tax rate.
“Since aircraft are highly mobile, many Embraer customers elect to complete business aircraft transactions out of state, and don’t have incentives to base aircraft in Florida,” wrote Spulak. “This results in aviation jobs and revenue leaving the state, simply because our aircraft sales tax laws are not competitive.”
The letter also referenced a study by the New York State Department of Transportation that found one new business aircraft moving to a state generates $1 million in spending and five direct jobs. Read Spulak’s letter of support.
Piper Aircraft CFO John Calcagno also wrote Gainer, calling passage of Senate Bill 580 “an important first step to keeping aviation dollars and jobs in Florida.”
Calcagno provided two examples of similar tax reform leading to economic gains for states: In New York, an aircraft sales tax exemption in 2015 has resulted in business aircraft traffic increasing by nearly 40 percent. In Massachusetts, an aircraft sales tax exemption has led to a significant increased in aircraft based in the state. Read Calcagno’s letter of support.
“It is critical that members based in Florida continue reaching out to their state legislators to support SB580,” said Scott O’Brien, NBAA senior director of government affairs. “The bill needs to be heard by the Senate Committee on Tax and Finance, so even if you’re expressed your support in the past, we urge you to continue contacting your state legislators,” O’Brien continued, noting that NBAA has prepared an email message Florida residents can send state lawmakers as part of the association’s Contact Congress tool.
General aviation provides 64,000 jobs and contributes $7.7 billion to Florida’s economy.
Embraer employs more than 1,200 people in Florida and has considerable investments in Fort Lauderdale and Melbourne. The new Praetor 500 and Praetor 600 business aircraft are manufactured and assembled in Melbourne. Vero Beach-based Piper employs nearly 1,000 Floridians. Aircraft deliveries increased by 48 percent in 2018, and the company reports a backlog of nearly 700 aircraft orders.