Bill Would Cut Tax on Aircraft Repair, Create Jobs

May 28, 2012

Not many airplanes are repaired in Pennsylvania compared to surrounding states, due in part to a tax policy that makes replacement parts more expensive here, according to State Rep. Robert Matzie (D-Allegheny/Beaver). A new bill passed by the House, sponsored by State Rep. Peter Daley (D-Washington/Fayette) and co-sponsored by Matzie, seeks to make an exemption.

Pennsylvania is one of the only states in the northeast not to offer a sales-and-use tax exemption for aircraft maintenance, Matzie said, "and we feel this is necessary." Matzie said the tax policy is killing the commonwealth's ability to attract industry and create jobs.

"Just as an example, in New York they employ a little over 9,000 people. In Ohio, it's over 8,000 people. And [Pennsylvania] employs a little less than 3,000 people," Matzie said.

Matzie said the bill would cost the state an estimated $12.4 million annually in lost tax revenue, but would offset the loss with new revenue from employment taxes. "We feel we have a very well trained workforce in place," he said, noting the workers trained by the Pittsburgh Institute of Aeronautics, as well as those laid off when U.S. Airways closed its Pittsburgh hub in 2004.

Also in lawmakers' minds is the idea that the break might entice airlines to relocate hubs to Pittsburgh International Airport in an effort to relieve stress on overburdened airspace around Philadelphia and New York. "You're only an hour away through the air to come to Pittsburgh," Matzie said. "Divert traffic here, as well as utilize this wonderful airport to maintain a hub, or to maintain a hub for maintenance of aircraft itself."

Matzie said he is "cautiously optimistic" the state Senate will act on the bill in parallel with current budget discussions, but has received no indication yet which way the vote will swing.