In 2007 the voters of Washington State passed I-960, a state “Initiative” (or referendum), that requires the Washington legislature to approve any tax increase by a 2/3 majority, rather than by simple majority. The Washington House last week voted to suspend this initiative, essentially paving the way to higher taxes in Washington State, including on aircraft.
Currently, Washington levies a token annual excise tax on aircraft based upon engine size and type, as follows:
Single engine, fixed wing $ 65
Small multi-engine, fixed wing $ 80
Large multi-engine, fixed wing $ 95
Turboprop multi-engine, fixed wing $ 115
Turbojet multi-engine, fixed wing $ 140
Helicopter $ 90
Sailplane, lighter-than-air, home built $ 35
These modest fees are in keeping with other western states that levy little or no tax on aircraft, including Oregon and Montana.
If the Washington Senate version of this legislation removes this tax-increase restriction, as expected, then the result will likely be a .5% tax on the value of the plane, a considerably higher figure.
This change is disappointing but hardly surprising in this era of cash-strapped state and local governments. Most states have far more limited borrowing ability than the federal government (a specialist in borrowing money). This pushes state legislatures to try and make up budget shortfalls by taxing what is there. As with all things, the more you tax it, the less of it you have. Let’s hope that Washington’s initiatives doesn’t cost it more in lost travel, manufacturing jobs and other general aviation revenues than it takes in, and that the damage isn’t permanent.
Fortunately the general aviation community has once again avoided user fees in President Obama’s Fiscal Year 2011 budget. I give tremendous credit to the “No Plane No Gain” campaign spearheaded by the National Business Aviation Association (NBAA) and the General Aviation Manufacturers Association (GAMA).