Tax break for out-of-state aircraft maintenance sent to governor

Tax break for out-of-state aircraft maintenance sent to governor

by
Mitch Coffman
February 29, 2012
Mitch Coffman
February 29, 2012

It’s not often a sales tax break passes through the Senate Local Government and Taxation Committee. In fact, it has been at least four years since one was approved by the committee.

Last week Rep. Frank Henderson’s, R-Post Falls, bill did just that. On Tuesday of this week, the bill flew through the full Senate 33-0 and will now head to Gov. Butch Otter’s desk for his consideration.

Henderson's bill approves a sales tax break bill for aircraft parts installed into out-of-state aircraft.

The bill was carried on the Senate floor by Sen. Chuck Winder, R-Boise, who said this legislation, or variations of it, have been considered for the last three years.

Winder said that the bill will be good for economic growth in Idaho, that it would create jobs and help during a time when the state—like much of the country—has been suffering. “Everyone knows that Idaho has suffered from a long period of high unemployment, declining state revenues, and we’ve been trying to figure out ways to generate jobs.”

Winder said that many jobs could be created from the legislation, according to research done by Henderson. “I think as you look at this it literally could generate dozens and dozens of jobs, and perhaps hundreds of jobs …”

The senator also explained that the bill is intended to bring business from out of state. “If an aircraft comes in from out of state, it has to be one registered out of the state of Idaho, and they come in for repairs, the parts that would installed on that aircraft would not be subject to sales tax, so it would be a sales tax exemption.”

Although it passed through both houses of the Legislature with ease, there has been testimony in the past from people who feel it gives an unfair advantage to a select few, while hurting competition. Winder believes that earlier versions of the bill may have looked that way, but this one does not.

“If you look at this, I think in the past we have looked at this as kind of a one job, or one employer bill. But I think as you look at this now and the way the new bill has been drafted, it indeed applies to several businesses around the state,” Winder said.

Henderson stated during testimony in committee hearings that 23 states do not charge a sales tax on aircraft parts for out-of-state clients, and believes that passing the bill would potentially produce 182 aircraft technician jobs in Idaho within five years.

The bill does have a sunset clause of five years, meaning that should the bill be signed into law, the state would monitor the results from the law for five years before deciding if it would become permanent.

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