NJBIA's Public Policy Forum: The Road to Recovery REGISTER

Legislation changing the formula for aviation fuel taxes would increase carrier costs for one of New Jersey’s largest employers and make the state less competitive, the New Jersey Business & Industry Association said today.

The bill, S-2892, was released from the Senate Budget and Appropriations Committee earlier today. NJBIA urged the committee to reject the bill because it would effectively raise taxes on United Airlines, and all commercial air carriers in New Jersey, to help pay for an extension of the PATH train service to Newark Liberty International Airport.

“United is one of New Jersey’s largest companies and a major economic engine for our state,” said NJBIA Vice President Andrew Musick. “Changing the fuel tax formula will result in increased costs, specifically at Newark Liberty International Airport, which is already the highest cost airport in the country.”

Such a move would likely spur United to focus on other areas of the country for any expansion plans or even consider shifting some operations out of New Jersey.

“When you look at all that United contributes to the state, it’s clear that we want them to continue to grow here,” Musick said. “When any company with significant infrastructure in the state also has a presence in other states, it’s not a discussion about them leaving but rather about them not growing.

United Airlines and its regional partner carriers operate more than 400 daily flights out of its Newark hub and serve 14.6 million passengers a year.

If enacted, the bill would expand the state’s taxes on aviation fuel requiring all commercial airline carriers to pay 4 cents per gallon on all fuel purchased in New Jersey. Federal rules allow the state to collect taxes on fuel used during taxiing and takeoff, but not during flight. The tax revenue must be used for airport-related improvements.

Musick said New Jersey and New York currently structure their aviation fuel taxes in a similar manner and changing the formula would put New Jersey at a competitive disadvantage in the region.