NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3431
SPONSOR: Lupardo (MS) TITLE OF BILL:
An act to amend the tax law, in relation to exempting from sales and
compensating use taxes the purchase of general aviation aircraft; and
providing for the repeal of certain provisions upon expiration thereof
PURPOSE:
This bill would establish a 5-year pilot program to exempt from sales
and use taxes the purchase of general aviation aircraft for a limited
time and require a study be conducted by the commissioner of taxation
and finance as to the economic and revenue impacts of the exemption.
SUMMARY OF PROVISIONS:
§ 1 - Titles the act the "New York Aviation Jobs Act."
§ 2 - Amends Tax Law § 1115 (dd) by amending paragraph 1 to exempt from
sales and use taxation the purchase of general aviation aircraft similar
to the current exemption granted to commercial service aircraft.
§ 3 - Requires a study be conducted by the commissioner of taxation and
finance as to the economic and revenue impacts of the exemption to be
submitted on or after November 1, 2019, to the Governor, temporary pres-
ident of the senate and the speaker of the assembly.
§ 4 - Effective date is April 1, 2016 and shall apply to all sales of
general aviation aircraft on or after that date and until March 31,
2021.
JUSTIFICATION:
Airports are among the economic engines that fuel growth in the economy
of the state and in the communities which they serve. The economic bene-
fits of airports in this state are quite impressive. Annual economic
activity attributable to aviation is $50 billion. The aviation sector
employs more than 394,500 state residents and generates $18 billion in
payroll and $4.5 billion in State and local tax revenue annually.
This bill will make New York competitive with other states that already
exempt sales taxes related to the purchase of general aviation aircraft.
Connecticut, Massachusetts, New Jersey, Maine and New Hampshire are a
few of the regional states that exempt these aviation purchases from
sales and use taxes or provide more favorable tax treatment. NY has lost
700 such aircraft over a ten-year period since 2002.
Therefore, this bill establishes a 5-year tax exemption pilot program,
similar to what was successfully enacted to exempt maintenance and
repair of general aviation aircraft from the sales and use tax several
years ago. A NY Tax Department report-A Review of the Sales and Use Tax
Exemption for Private Aircraft Parts and Service-on that exemption found
that, since its enactment in 2004, New York has attracted significant
investment in aviation services, resulting in an expansion of aviation
maintenance and repair businesses, the creation of jobs here in New York
and an increase in state tax revenue. (FAA data indicates the establish-
ment of 23 such major aviation maintenance and repair businesses and 686
new jobs in the state since 2004).
By adopting a 5 year exemption pilot program for the purchase of general
aviation aircraft, New York will encourage such aircraft and business
jets to locate here. Like the maintenance and repair exemption, an
exemption for the purchase of aircraft is expected to increase state
revenues and leverage significant economic returns for local communities
and the state.
LEGISLATIVE HISTORY:
2005-2006: S.3655 - Passed Senate/A.6819-A - Ways & Means
2007-2008: S.425-B - Passed Senate/A.3806-B - Ways & Means
2009-2010: S.4551-A - Investigations & Government Operations/A.5960 -
Ways & Means
2011-2012: S.2678 - Passed Senate/A.4818 - Ways & Means
2013-2014: S.273-B - Passed Senate/A.3677-B - Ways & Means
FISCAL IMPLICATIONS:
Estimated reduction of $7 million annually (a clear indication that
there is barely any new aircraft sales and basings activities happening
in New York) will be more than offset by increases in economic activity,
jobs and state and local tax revenue (the impact of each business
aircraft on average is 5 on airport jobs and $1 million of economic
activity according to DOT). The economic development benefits at
airports will generate payroll taxes, property taxes, and sales taxes in
other ancillary services and increased fuel tax collections from the
expected increase of in-state basing of general aviation aircraft and
the resulting increase in aviation activity.
EFFECTIVE DATE:
This act shall take effect April 1, 2016, and shall apply to sales of
general aviation aircraft made and uses occurring on or after that date
in accordance with the applicable transitional provisions of section
1106 and 1107 of the tax law, but shall not apply to sales occurring
after March 31, 2021, and section one of this act shall expire and be
deemed repealed April 1, 2021. Provided, however, that aircraft subject
to exemption pursuant to paragraph 1 of subdivision (dd) of section 1115
of the tax law, as amended by section two of this act, shall remain so
exempt after the expiration and repeal of section two of this act,
including instances where the aircraft is subsequently sold or the
ownership is transferred or assigned, for the useful life of the
aircraft.
