BILL NUMBER:  S5516

 TITLE OF BILL :

An act to amend part L of chapter 60 of the laws of 2004 relating to
exempting parts used exclusively to maintain, repair, overhaul or
rebuild aircraft or services associated therewith from the sales and
compensating use tax, in relation to the effectiveness thereof


 PURPOSE :

This bill would repeal the December 1, 2009 sunset of the sales tax
exemption on the maintenance, repair, overhaul or rebuilding of
aircraft.

 SUMMARY OF PROVISIONS :

§ 1- Repeals the December 1, 2009 expiration date of the current sales
tax exemption for the maintenance, repair, overhaul or rebuilding of
aircraft that was enacted in 2004 and requires the Tax Department to
conduct a study on the impact of the exemption no later than December
2010.

§ 2- Effective date.

              

 EXISTING LAW :

Section 2 of part L of Chapter 60 of the laws of 2004 exempted parts
used to maintain, repair, overhaul or rebuild aircraft or services
associated therewith from the sales and compensating use tax. This
exemption is scheduled to sunset December 1, 2009.

 JUSTIFICATION :

Airports are one of the economic engines that fuel growth in the
communities that they serve.  The economic benefits of airports in
this state are quite large.

* Annual economic activity attributable to aviation in nearly 536
billion.
* Over 300,000, New York residents owe their jobs directly or
indirectly to airports. These jobs pay nearly $12 billion in payroll
on an annual basis.
* Airports and aviation industries pay over $ 2.7 billion in state and
local taxes each year.

New York air service is critical to the economic well being of this
state and to the traveling public. Airline commercial service is
provided at 18 airports located in urban and rural areas throughout
the state. In addition to commercial service airports, hundreds of
other general aviation airports are located throughout the state.
These airports provide services such as charter flights for businesses
and executives, quick access for medical emergencies and law
enforcement needs, flight training, and tourism & recreational flying.

This bill will maintain New York's competitiveness with other states
that already exempt sales taxes related to aviation activities.
Connecticut, Massachusetts, New Jersey and New Hampshire are a few of
the regional states that exempt these aviation sales and use taxes.

Since the sales tax exemption for the maintenance, repair, overhaul or
rebuilding of aircraft was enacted, New York has attracted significant
investment in aviation services evidenced by the decision to locate
such facilities at Albany International Airport by Eclipse Aviation
and Honda.  While this bill will reduce state revenue by a relatively
small amount, it will leverage significant economic returns for local
communities and the state.

 LEGISLATIVE HISTORY :
This is a new bill.

 FISCAL IMPLICATIONS :
SFY 09-10: reduces state sales and compensating use tax revenues by $1
million; $2 million annually when fully effective. However, state and
local governments will see an offset to this tax loss with an
increased amount of economic development, payroll taxes, property
taxes, and sales taxes in other ancillary services and increased fuel
tax collections from aircraft maintenance.

 EFFECTIVE DATE :
Effective immediately.