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House panel approves tax rebate for airplane repairs

House panel approves tax rebate for airplane repairs

Dustin Hurst
February 12, 2010
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February 12, 2010

Companies making repairs on large turbine aircraft in Idaho may soon be able to offer more competitive rates to clients under a new plan passed by the House Revenue and Taxation Committee Friday.

The plan, co-sponsored by House Majority Leader Mike Moyle, R-Star, and House Minority Leader John Rusche, D-Lewiston, will enable companies that provide maintenance and repair services for aircraft weighing more than 12,500 lbs. to apply for a sales tax rebate on any parts used in the repair of the aircraft.  According to the bill's fiscal impact statement, Western Aircraft, one corporation endorsing the bid, collected $192,000 in sales taxes on repair parts in 2009.  The general fund would not lose all of that money, however.  Only 20 percent, or roughly  $38,000, would be lost due to the rebate because many out-of-state aircraft owners are charged certain taxes by their home states that would make it illogical for them to receive the rebate.  The rebates would be applied for and paid directly to the owner of the aircraft.

Western Aircraft Chief Operating Officer Al Hoyt told lawmakers that this new provision would help spur growth and attract new business to Idaho.  Hoyt said that when his company is forced to add on 6 percent to every quote for the taxes assessed on repair parts, which makes it difficult to compete.  He added that every one of Western's competitors is based in a state that has either an exemption of a rebate in place.

With the rebate program in place and the additional business it could create, Hoyt told legislators that Western will likely need to hire additional employees at an average salary of $50,000, which, he said, could have a decent impact on the state's economy.  He touted the fact that for every $50,000 job that is created in his industry, an additional $29,500 in earnings is generated within the economy, though those earnings don't necessarily come in or to Idaho.

Rusche spoke in favor the proposal, saying that many in the aircraft repair industry feel that a rebate program such as the one proposed in the bill almost always leads to job creation.  He said the program would also help to diversify Idaho’s economy and create more jobs in the skilled labor sector.

The measure passed the committee unanimously and now moves on to the full House for a vote.

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