|  Home   |  Site Search   |  Tax News & Views  |

House Passes Airline Ticket Tax Extension

Wednesday, February 26, 1997

OnLine

The House Feb. 26 voted 347 to 73 to pass a bill, H.R. 668, extending the airline ticket and other aviation-related taxes until Sept. 30.

An identical bill will not be brought up in the Senate until next week. Though a unanimous consent agreement ensuring passage of the measure is expected to be worked out in the Senate, some Senators have been reluctant to support the measure because of concern over the sunset date and other issues, congressional aides said.

House passage of the bill had been in doubt because Rep. Van Hilleary, R-Tenn., objected to the fact that the extension of the tax did not contain a corresponding tax cut.

The measure temporarily would extend the ticket tax and raise $2.7 billion. As for a long-term funding mechanism for the Federal Aviation Administration, a coalition of the nation’s largest airlines support replacing the tax with user fees that would be imposed with each takeoff and landing, but discount carriers support a tax based on fuel use.

Tax Panel Announces Hearing On Clinton’s Revenue Hikes: The House Ways and Means Committee announced a March 12 hearing on the revenue-raising provisions in the President’s fiscal 1998 budget request.

House Ways and Means Committee Chairman Bill Archer, R-Texas, has not ruled out supporting some of the proposals in the request. The panel "will study carefully the revenue raising proposals submitted by the Clinton Administration in order to determine which are firmly grounded in tax policy," Archer said in the release.

The date of the hearing almost certainly will not be considered the date of first committee action for purposes of the effective dates of certain proposals in the President’s budget. If past practice is followed, the date of first committee action would be the date Archer releases his version of the proposal.

Archer expressed concern about the effective dates of several proposals. "I want to learn more about potential effective dates for the proposals" that have retroactive effective dates or retroactive impact, the chairman said.

Moderate Democrats Offer Budget Plan: A group of moderate House Democrats offered a plan that would balance the federal budget by 2002 without any tax cuts.

The coalition, known as "Blue Dogs," offered their plan as an alternative to the President’s proposal and as an alternative to whatever proposal congressional Republicans develop.

"Once again, the coalition budget is setting the standard for a potential agreement, not only in terms of substantive integrity and budgetary credibility, but also with an eye toward the political viability that comes only with fairness," said the group’s leader, Rep. Charles Stenholm, D-Texas.

Tax Reform The Answer To IRS Problem: The National Commission on Restructuring the Internal Revenue Service heard testimony from House Majority Leader Dick Armey, R-Tex., who said that the IRS’ job would be easier if the tax code were simpler.

The nation needs a new tax system that enables the IRS to collect revenues "in the least intrusive way," Armey said. One of the IRS’ the problems is that they must rely on a tax code that is too complicated to administer, he added.

At the meeting, commission members indicated their differing views about privatization. Commission member Gerry Harkins asked Armey whether privatizing some portions of the IRS would help the agency.

Commission member Robert Tobias, on the other hand, asked whether turning some agency functions over to private contractors would produce the same results as the current system in which government employees are restricted by various privacy laws.

Armey responded by saying that simplifying the tax code would go a long way toward solving problems with the Service.

Less Restrictive Short-Against-Box Bill Offered: House Ways and Means Committee member Rep. Barbara Kennelly, D-Conn., introduced a bill that would curtail the tax-avoidance mechanism know as short-against-the-box, but covers fewer deals than the President’s proposal.

Kennelly said on the House floor that the President’s plan should be modified because of concerns that it adversely impacts valid hedging transactions.

The bill goes further than the President’s proposal because it attacks swap funds, which "Congress thought it eliminated almost thirty years ago," she said on the House floor.

Treasury Issues Revised Revenue Estimates: The Treasury Department issued revised revenue estimates for its balanced budget plan showing that the Clinton budget would produce a $224 billion tax cut over 10 years.

The previous estimate showed a $97 billion cut over five years.

The tax cuts would be paid for through "the elimination of unwarranted tax benefits and the closing of corporate loopholes" totaling $73.3 billion, the Treasury Department said in a press release.