An act to amend part L of chapter 60 of the laws of 2004, amending the tax law relating to exempting parts used for aircrafts

Title of bill

An act to amend part L of chapter 60 of the laws of 2004 relating to exempting parts used exclusively to maintain, repair, overhaul or rebuild aircraft or services associated therewith from the sales and compensating use tax, in relation to the effectiveness thereof

Purpose

This bill would repeal the December 1, 2009 sunset of the sales tax exemption on the maintenance, repair, overhaul or rebuilding of aircraft.

Summary of provisions

§ 1- Repeals the December 1, 2009 expiration date of the current sales tax exemption for the maintenance, repair, overhaul or rebuilding of aircraft that was enacted in 2004 and requires the Tax Department to conduct a study on the impact of the exemption no later than December 2010.

§ 2- Effective date.

Existing law

Section 2 of part L of Chapter 60 of the laws of 2004 exempted parts used to maintain, repair, overhaul or rebuild aircraft or services associated therewith from the sales and compensating use tax. This exemption is scheduled to sunset December 1, 2009.

Justification

Airports are one of the economic engines that fuel growth in the communities that they serve. The economic benefits of airports in this state are quite large.

* Annual economic activity attributable to aviation in nearly 536 billion. * Over 300,000, New York residents owe their jobs directly or indirectly to airports. These jobs pay nearly $12 billion in payroll on an annual basis. * Airports and aviation industries pay over $ 2.7 billion in state and local taxes each year.

New York air service is critical to the economic well being of this state and to the traveling public. Airline commercial service is provided at 18 airports located in urban and rural areas throughout the state. In addition to commercial service airports, hundreds of other general aviation airports are located throughout the state. These airports provide services such as charter flights for businesses and executives, quick access for medical emergencies and law enforcement needs, flight training, and tourism & recreational flying.

This bill will maintain New York's competitiveness with other states that already exempt sales taxes related to aviation activities. Connecticut, Massachusetts, New Jersey and New Hampshire are a few of the regional states that exempt these aviation sales and use taxes.

Since the sales tax exemption for the maintenance, repair, overhaul or rebuilding of aircraft was enacted, New York has attracted significant investment in aviation services evidenced by the decision to locate such facilities at Albany International Airport by Eclipse Aviation and Honda. While this bill will reduce state revenue by a relatively small amount, it will leverage significant economic returns for local communities and the state.

Legislative history

This is a new bill.

Fiscal implications

SFY 09-10: reduces state sales and compensating use tax revenues by $1 million; $2 million annually when fully effective. However, state and local governments will see an offset to this tax loss with an increased amount of economic development, payroll taxes, property taxes, and sales taxes in other ancillary services and increased fuel tax collections from aircraft maintenance.

Effective date

Effective immediately.