BILL NUMBER:S273

TITLE OF BILL:
An act
to amend the tax law, in relation to providing an exemption from sales
and compensating use taxes for certain aircraft purchased in the
state

PURPOSE:
This bill would exempt from sales and use taxes the purchase of
general aviation aircraft.

SUMMARY OF PROVISIONS:
 § 1- This act shall be known and may be cited as the "New York
 Aviation Jobs Act".

 § 2- Amends Tax Law § 1115 (dd) by amending paragraph 1 to exempt from
 sales and use taxation the purchase of general aviation aircraft
 similar to the current exemption granted to commercial service
 aircraft.

 § 3- Effective date.

 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 is $36 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 1his
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 make New York competitive with other states that
already exempt sales taxes related to the purchase of general
aviation aircraft. Connecticut, Massachusetts, New Jersey and New
Hampshire are a few of the regional states that exempt these aviation
purchases from sales and use taxes or provide more favorable tax
treatment.

Since the sales tax exemption for the maintenance, repair, overhaul or
rebuilding of aircraft was enacted in 2004, New York has attracted
significant investment in aviation services. The recent study by the
New York State Department of Taxation and Finance--A Review of the
Sales and Use Tax Exemption for Private Aircraft Parts and
Service---demonstrates that this particular tax exemption has been a


tremendous success, resulting in an expansion of aviation maintenance
and repair businesses, the creation of jobs here in New York and an
increase in state tax revenue.

Should New York exempt the purchase of general aviation aircraft, it
will timber encourage existing aircraft maintenance facilities to
expand their operations. In addition, other companies would look to
New York to locate or relocate their business jets and operations
within this state.
Like the maintenance and repair exemption, an exemption for the
purchase of aircraft is expected to increase state revenues and
leverage significant economic returns for local communities and the
state.

LEGISLATIVE HISTORY:
2007-2008: S.425-B
2009-2010: S.4551-A - Referred to Investigations & Government Operations
2011-2012: S.2678 - Passed Senate

FISCAL IMPLICATIONS:
NYS Department of Taxation & Finance estimates that state and local
governments will see an offset to possible tax losses 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 and in-state basing as a
result of the increase in aviation activity.

EFFECTIVE DATE:
This act shall take effect immediately and shall apply to sales made,
services rendered and uses occurring on or after such date in
accordance with the applicable transitional provisions of sections
1106 and 1217 of the tax law. The commissioner of taxation and
finance shall be immediately authorized to adopt and amend any rules
or regulations and issue any procedure, forms or instructions
necessary to implement this act on its effective date.

                                BILL NUMBER:S273A

TITLE OF BILL:  An act to amend the tax law, in relation to exempting
from sales and compensating use taxes the purchase of general aviation
aircraft; and providing for the repeal of certain provisions upon
expiration thereof

PURPOSE:

This bill would establish a 5-year pilot program to exempt from sales
and use taxes the purchase of general aviation aircraft for a limited
time and require a study be conducted by the commissioner of taxation
and finance as to the economic and revenue impacts of the exemption.

SUMMARY OF PROVISIONS:

§ 1- Titles the act the "New York Aviation Jobs Act."

§ 2- Amends Tax Law § 1115 (dd) by amending paragraph 1 to exempt from
sales and use taxation the purchase of general aviation aircraft
similar to the current exemption granted to commercial service
aircraft.

§ 3- Requires a study be conducted by the commissioner of taxation and
finance as to the economic and revenue impacts of the exemption to be
submitted on or after November 1, 2018, to the Governor, temporary
              

president of the senate and the speaker of the assembly.

§ 4- Effective date is April 1, 2014 and shall apply to all sales of
general aviation aircraft on or after that date and until March 31,
2019.

JUSTIFICATION:

Airports are among the economic engines that fuel growth in the
economy of the state and in the communities which they serve. The
economic benefits of airports in this state are quite impressive.
Annual economic activity attributable to aviation is $50 billion. The
aviation sector employs more than 394,500 state residents and
generates $18 billion in payroll and $4.5 billion in State and local
tax revenue annually.

This bill will make New York competitive with other states that
already exempt sales taxes related to the purchase of general aviation
aircraft. Connecticut, Massachusetts, New Jersey, Maine and New
Hampshire are a few of the regional states that exempt these aviation
purchases from sales and use taxes or provide more favorable tax
treatment. NY has lost 700 such aircraft since 2002.

Therefore, this bill establishes a 5-year tax exemption pilot program,
similar to what was successfully enacted to exempt maintenance and
repair of general aviation aircraft from the sales and use tax a few
years ago. A Tax Department report-A Review of the Sales and Use Tax
Exemption for Private Aircraft Parts and Service-on that exemption
found that, since its enactment in 2004, New York has attracted
significant investment in aviation services, resulting in an expansion
of aviation maintenance and repair businesses, the creation of jobs


here in New York and an increase in state tax revenue. (FAA data
indicates the establishment of 23 such major aviation maintenance and
repair businesses and 686 new jobs since 2004).

By adopting a 5 year exemption pilot program for the purchase of
general aviation aircraft, New York will encourage the location of
such aircraft and business jets to locate here. Like the maintenance
and repair exemption, an exemption for the purchase of aircraft is
expected to increase state revenues and leverage significant economic
returns for local communities and the state.

LEGISLATIVE HISTORY:

2005-2006: S.3655 - Passed Senate
2007-2008: S.425-B - Passed Senate
2009-2010: S.4551-A - Referred to Investigations & Government
Operations
2011-2012: S.2678 - Passed Senate

FISCAL IMPLICATIONS:

Estimated reduction of $13.4 million annually will be more than offset
by increases in economic activity, jobs and state and local tax
revenue (the impact of each business aircraft on average is 5 on
airport jobs and $1 million of economic activity according to DOT).
The economic development benefits at airports will generate payroll
taxes, property taxes, and sales taxes in other ancillary services and
increased fuel tax collections from the expected increase of in-state
basing of general aviation aircraft and the resulting increase in
aviation activity.

EFFECTIVE DATE:

This act shall take effect April 1, 2014, and shall apply to sales of
general aviation aircraft made and uses occurring on or after that
date in accordance with the applicable transitional provisions of
section 1106 and 1107 of the tax law, but shall not apply to sales
occurring after March 31, 2019, and section one of this act shall
expire and be deemed repealed April 1, 2019. Provided, however, that
aircraft subject to exemption pursuant to paragraph 1 of subdivision
(dd) of section 1115 of the tax law, as amended by section two of this
act, shall remain so exempt after the expiration and repeal of section
two of this act, including instances where the aircraft is
subsequently sold or the ownership is transferred or assigned, for the
useful life of the aircraft.