State Review Finds New York Aviation Tax Policy Promotes Jobs, Economic Growth

ALBANY, NY (05/20/2009)(readMedia)-- In the throes of a recession that is adversely impacting most sectors of New York's economy, an analysis issued by the New York State Department of Taxation and Finance reports that general aviation is significantly contributing jobs, income and revenue following enactment of a state policy that offers aviation sales tax exemptions for aircraft maintenance and repairs..

The study, entitled, "A Review of the Sales and Use Tax Exemption for Private Aircraft Parts and Service," was commissioned by the New York State Legislature and the Governor as part of the 2004 sales tax exemption enacting statute.

"This is what those of us involved in aviation knew all along, that if you adjusted New York aviation taxes to be more in line with other states, good things will happen," said William McShane, President of the New York Aviation Management Association (NYAMA), the state's aviation industry trade group.

The study, based on both survey results and empirical sales tax data, found not only an increase in taxable revenue generated by those businesses engaged in aviation maintenance and repair, but also a 3% jump in employment in the sector from 2004 to 2005.

NYAMA is advocating to make the tax exemption permanent and to expand it to cover sales of private aircraft, which receive more favorable tax treatment in neighboring states. The maintenance and repair exemption is scheduled to expire December 1 of this year and the study clearly indicates the positive economic impacts of the exemption and the need for its continuation.

"The findings represent a significant justification for the repeal of the sunset," McShane said.

While the report suggests the national recovery of the aviation industry after 2004 as a possible contributing factor to the growth in aviation in New York during the study period, when comparing the experience in New York to that of other states, NYAMA finds a strong correlation between the positive growth of the aviation sector in New York and the enactment of the sales tax exemption.

"One has only to look to neighboring Pennsylvania, a state that taxes its aviation maintenance and repair businesses," McShane instructed. "A study of that state's experience shows no growth in Pennsylvania's aviation maintenance and repair business, while New York's was significant during the same period," McShane pointed out. "This is a case where New York, by enacting the tax cut in 2004, put this state in a better position to take advantage of the apparent economic recovery in the aviation industry nationwide and it worked!"

NYAMA is confident that state legislators and the Governor will recognize the strength of the findings and will act favorably to help grow the aviation business further in New York by repealing the sunset and expanding the exemption to purchases of aircraft, as proposed by S.4551 (Stachowski)/A5960 (Schimminger).

"The reality is we are in competition with other states for this business, and this study shows that tax policy matters a whole lot," McShane concluded.