Proposed tax break on aircraft probably not enough

Mona Ridder
Cumberland Times-News

January 26, 2008 09:35 pm

— The headline jumped out at me from the second page of Tuesday’s Times-News Region section.
This is legislation that the Potomac Highlands Airport Authority, operator of the Greater Cumberland Regional Airport, has been seeking for many years.
Last year the legislation got down to the wire and failed because of concerns, primarily generated by assessors, that counties could not afford to lose the tax on aircraft based at in-state airports.
In the case of Cumberland, the airport, while located inside West Virginia’s borders, serves many more businesses and out-of-state residents than in-state. It has, however, lost business because of the fact that out-of-state registered commercial aircraft will not base at Cumberland because of the tax which the owners don’t have to pay in other states.
Actually, none of the five states surrounding West Virginia tax aircraft, according to an Associated Press story.
And while Manchin’s proposal for a tax break on these aircraft is laudable, it’s not going to eliminate the tax, nor keep the state ahead of its neighbors on the issue.
The governor proposes to tax airplanes and helicopters owned by airlines or private businesses at their salvage value, 5 percent of their original cost.
It’s hardly what Maryland residents and businesses that own aircraft were hoping for, but I suppose it’s a start.
Sen. John Yoder, R-Jefferson, who introduced similar legislation last year that failed, said that the tax break could help transform the Martinsburg airport into a major storage and maintenance hub, given its space and proximity to Dulles International Airport in Virginia.
Local officials see the situation similarly, according to Cindy Pyles, Mineral County commissioner and chairwoman of the airport authority. She said that the airport has lost businesses because of the tax issue and cutting it, or eliminating it altogether, would draw business to the facility.
The airport is currently in something of a holding pattern, as it no longer offers scheduled air service and is working toward a $45 million runway upgrade, slated for construction in 2010.
Jim Stahl of Cumberland, who previously chaired the authority, attended numerous meetings with state and local officials in an effort to have the out-of-state aircraft exempted from the property tax. His efforts not only failed but he was told that it is a constitutional issue in West Virginia and could not be changed.
Pyles and airport manager Terry Malone have continued to lobby for the tax reduction or exemption, citing the potential for expanded economic development at the facility that possibly could bring in much more business tax revenue than would be lost by the exemption.
Information from the Federal Aviation Administration indicates that more than 1,200 planes and 60 helicopters are registered in West Virginia.
Manchin’s proposal is limited to those aircraft owned by airlines or private businesses and does not extend to individuals of the general aviation community who own aircraft.
One person wondered aloud recently that if the proposal passes how many private pilots might decide to incorporate to be able to take advantage of the tax cut.
I’m not sure I think that is a bad thing, because if they would incorporate and base their aircraft in Cumberland there would still be additional revenue generated to the local airport in hangar rental and fuel sales, not to mention other business services that would likely be used such as maintenance.
I doubt that would happen though, because depending on the state in which they incorporate they are likely to pay more in corporation fees and taxes than the current West Virginia property tax on aircraft.
Yoder said he suspects that state residents and businesses keep aircraft outside the state to avoid the tax as well.
Manchin’s proposal would apparently slash the tax for both in-state and out-of-state companies.
There are roughly three dozen communities in West Virginia that have airports, the closest are Petersburg in Grant County, Martinsburg and Morgantown. In similar proximity in Maryland are Oakland and Hagerstown.
The Greater Cumberland Regional Airport, located in Wiley Ford, W.Va., serves the municipal region of Cumberland, Md., and surrounding areas in West Virginia.
Contact Mona Ridder at mridder@times-news.com.

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