Provides for an exemption from sales and use taxes on the sale of general aviation aircraft and for a report on the economic impact thereof

Summary of provisions

§ 1- Titles the act the "New York Aviation Jobs Act."

§ 2- Amends Tax Law § 1115 (dd) by amending paragraph 1 to exempt from sales and use taxation the purchase of general aviation aircraft similar to the current exemption granted to commercial service aircraft.

§ 3- Requires a study be conducted by the commissioner of taxation and finance as to the economic and revenue impacts of the exemption to be submitted on or after November 1, 2019, to the Governor, temporary president of the senate and the speaker of the assembly.

§ 4- Effective date is April 1, 2015 and shall apply to all sales of general aviation aircraft on or after that date and until March 31, 2020.

Justification

Airports are among the economic engines that fuel growth in the economy of the state and in the communities which they serve. The economic benefits of airports in this state are quite impressive. Annual economic activity attributable to aviation is $50 billion. The aviation sector employs more than 394,500 state residents and generates $18 billion in payroll and $4.5 billion in State and local tax revenue annually.

This bill will make New York competitive with other states that already exempt sales taxes related to the purchase of general aviation aircraft. Connecticut, Massachusetts, New Jersey, Maine and New Hampshire are a few of the regional states that exempt these aviation purchases from sales and use taxes or provide more favorable tax treatment. NY has lost 700 such aircraft since 2002.

Therefore, this bill establishes a 5-year tax exemption pilot program, similar to what was successfully enacted to exempt maintenance and repair of general aviation aircraft from the sales and use tax a few years ago. A Tax Department report-A Review of the Sales and Use Tax Exemption for Private Aircraft Parts and Service-on that exemption found that, since its enactment in 2004, New York has attracted significant investment in aviation services, resulting in an expansion of aviation maintenance and repair businesses, the creation of jobs

here in New York and an increase in state tax revenue. (FAA data indicates the establishment of 23 such major aviation maintenance and repair businesses and 686 new jobs since 2004).

By adopting a 5 year exemption pilot program for the purchase of general aviation aircraft, New York will encourage the location of such aircraft and business jets to locate here. Like the maintenance and repair exemption, an exemption for the purchase of aircraft is expected to increase state revenues and leverage significant economic returns for local communities and the state.

Legislative history

2005-2006: S.3655 - Passed Senate 2007-2008: S.425-B - Passed Senate 2009-2010: S.4551-A - Referred to Investigations & Government Operations 2011-2012: S.2678 - Passed Senate

Fiscal implications

Estimated reduction of $13.4 million annually will be more than offset by increases in economic activity, jobs and state and local tax revenue (the impact of each business aircraft on average is 5 on airport jobs and $1 million of economic activity according to DOT). The economic development benefits at airports will generate payroll taxes, property taxes, and sales taxes in other ancillary services and increased fuel tax collections from the expected increase of in-state basing of general aviation aircraft and the resulting increase in aviation activity.

Effective date

This act shall take effect April 1, 2015, and shall apply to sales of general aviation aircraft made and uses occurring on or after that date in accordance with the applicable transitional provisions of section 1106 and 1107 of the tax law, but shall not apply to sales occurring after March 31, 2020, and section one of this act shall expire and be deemed repealed April 1, 2020. Provided, however, that aircraft subject to exemption pursuant to paragraph 1 of subdivision (dd) of section 1115 of the tax law, as amended by section two of this act, shall remain so exempt after the expiration and repeal of section two of this act, including instances where the aircraft is subsequently sold or the ownership is transferred or assigned, for the useful life of the aircraft.