TRENTON — A state Senate committee Thursday advanced a plan that would hike taxes on United Airlines by $20 million, despite warnings that it could raise airfares or reduce routes at Newark Liberty International Airport.
New Jersey only taxes the fuel a plane burns during taxiing and take-off. A bill sponsored by Senate President Steve Sweeney, S2892, would instead tax all fuel – but only for United Airlines, which accounts for two-thirds of Newark’s air passengers.
Sean
Williams, senior vice president for state and local government affairs
for the industry group Airlines for America, said Newark is already the
costliest airport in the nation and that this change would raise
United’s fuel tax 20-fold.
“That is a major tax increase,” Williams said.
“And so that puts you all at substantial risk of causing costs to go up
on passengers and possibly airlines to cut routes. I mean, something has
to give here.”
“It comes with a consequence.
Every action that you take has a consequence,” he said. “And a major tax
increase like this will undoubtedly have consequences for passengers.”
The
revenues would be used to help fund a PATH train extension to the
airport, including a stop in Newark’s South Ward. Williams and United
say that wouldn’t be legal if the money is not used for aviation
purposes.
“So we have choices as to
where we will grow,” Kaplan said. “And if this additional and
discriminatory tax scheme becomes law, it is my profound concern that
this will impact our ability and stunt our ability to invest in future
investments at Newark and in turn New Jersey.”
No
other airlines would be affected, as the bill only affects airlines
with 8 million passengers a year in New Jersey. United has more than 28
million. No other airlines have more than around 2 million.
Zakiyy Medina, baggage handler for United Airlines
at Newark Liberty, said it takes him about 2 hours to commute back and
forth from work on NJ Transit – and that despite the cost, it’s his only
option.
“A jet fuel on United could easily
fund the extension of the PATH trains to Newark Airport,” Medina said.
“That would make it affordable for the 6,000 airport workers who live in
New Jersey to get to work. It would make Newark Airport more accessible
for the 43 million passengers who travel through our airport each
year.”
Kevin Brown, a vice president for the
SEIU 32BJ union in which Medina is a member, said the Tax Foundation
ranks New Jersey 45th in the country for its combined jet fuel tax rate.
“The rest of the country has higher jet fuel taxes
for a reason. They support our local economies,” Brown said. “There is
no reason to provide such extensive tax breaks to the airlines when it
comes to jet fuel.”
Labor unions weren’t
unanimously behind the bill. Inez Garcia-Keim, lead customer service
agent for United Airlines at Newark Airport and president of the
AFL-CIO’s New Jersey State Council of Machinists, said it would hurt
United and aviation employment in the region.
“Simply
stated, higher taxes on jet fuel would significantly drive up costs and
would have a negative impact on our customers and our jobs,”
Garcia-Keim said.
Business groups warned that the change would
encourage United to shift flights to airports in New York. State Sen.
Bob Singer, a Republican from Lakewood, said if the tax goes up and
fares rise with it, Central Jersey residents will look south.
“From
where I am in Jersey, it’s just as close to go to Philadelphia Airport
as it comes to Newark,” Singer said. “If it’s going to cost me more to
go to Newark than Philadelphia, I’m going to go to Philadelphia.”
The
bill was advanced by the Senate Transportation Committee, though with
the rare but nonbinding qualification that it was reported “without
recommendation.”
Singer and state Sen. Nicholas
Sacco, D-Hudson, voted no. Democrats Sandra Cunningham, Patrick Diegnan
Jr. and Vin Gopal voted to advance the bill.
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