A Mecklenburg County lawmaker Tuesday defended a tax break for American Airlines after one critic said it was unfair to average taxpayers.
The measure, part of a broader bill on North Carolina’s gasoline tax, passed two House committees Tuesday on its way to what appears to be a fast track to House approval.
The bill would extend the cap on sales taxes on airline fuel. The cap – at $2.5 million – expires in January.
The only beneficiary would be American Airlines, which merged with US Airways last year. Analysts say extending the break would cost the state $12 million.
“There’s a lot of middle-class people who drive a lot and we’re not giving them a break on their sales tax,” Democratic Rep. Paul Luebke of Durham told the committee. “Is (American Airlines) going to pull out of its Charlotte hub if it doesn’t get $12 million?”
Republican Rep. Charles Jeter of Huntersville defended the cap, calling the fuel expense “a business input” for the airline.
“Make no mistake,” he said, “Charlotte Douglas International Airport is the most important economic engine, at least in the Piedmont part of the state. If you think American Airlines won’t pull out of a hub if the economic environment is not advantageous, I invite you to fly through Pittsburgh.”
After US Airways dropped Pittsburgh as a hub several years ago, the city lost hundreds of daily flights, leaving much of the airport unused.
Fuel is typically the biggest single expense for an airline. The push for a new tax exemption comes as fuel costs have plummeted and airline profits soar to new records. Last month, American Airlines reported a $597 million profit for its fourth quarter.
“We’re grateful that the legislature is finding ways to address the importance of the cap,” said American lobbyist Tracy Montross.
Unite Here, a union that represents 33,000 airport and airline workers, also has taken aim at aviation fuel tax breaks, calling the issue a question of economic fairness. In a recent study, the group estimated that such tax breaks net airlines about $1 billion a year nationwide.