BOSTON — A proposal to end a tax break on aircraft sales and parts in Massachusetts is causing turbulence for aviation businesses, which fear losing customers to neighboring states.
BOSTON — A proposal to end a tax break on aircraft sales and parts in Massachusetts is causing turbulence for aviation businesses, who fear losing customers to neighboring states.
Aviation executives say ending the tax break would drive business to New Hampshire, Rhode Island and Connecticut, which do not have a sales tax on aircraft sales and parts.
"We are the only full, Massachusetts-based airline, independent, and this is a complete hit, a target right between our eyes," said Michelle Haynes, a spokeswoman for Cape Air, which flies between Boston, New Bedford and the Cape and Islands, among other destinations.
Gov. Deval Patrick proposed ending the tax break in his budget proposal in January. House budget writers endorsed the idea in their proposed spending plan last week. The Patrick administration estimated it would raise $9 million a year for state government.
The full House debates the budget next week. State representatives who have airports in their districts were lining up behind an amendment to retain the exemption.
Rep. Sarah Peake, D-Provincetown, who supports the tax break, said it is about "saving jobs."
"People might mistake it for giving rich airplane owners a break, but that's not the case," she said. "Airlines like Cape Air, which employ over (650) year-round employees, need this tax break."
Senate President Therese Murray, D-Plymouth, also supports the tax break, giving the industry a powerful ally on the issue.
"The Senate president is not in favor of reinstating the sales tax on aircraft and aircraft parts," said Murray's spokeswoman, Samantha Dallaire. "Removing the exemption would drive business out of Massachusetts."
Patrick told a group of reporters recently that ending the exemption was a "good idea," but he was willing to listen to the opposition.
"There will be compromise before all this is over," he said. "We're open to other arguments. We've got to hear them."
The 5 percent sales tax on aircraft sales and parts was lifted in 2002, after years of lobbying by the aviation industry. Aviation companies said it quickly resulted in more business.
They said aircraft owners will simply fly to bordering states like New Hampshire to maintain their planes if it is gone.
"It will really hurt the aviation industry in this state when it comes to the actual businesses, as well as jobs," said Richard Cawley, the president and CEO of Rectrix Aviation in Hyannis, which offers charters to high-end clients.
"We've been pretty successful in repositioning some of the aircraft from other 'touch' states, Connecticut, Rhode Island. "¦ If that (tax break) is gone, you will lose that."
William Weibrecht, Rectrix's chief operating officer, said reinstating the sales tax would be a financial blow, "especially to the mom and pop businesses, not just the big facilities."