AAA  Feb. 28, 2015 11:22 AM ET
Lawmakers may end tax break on jet fuel, to Delta's dismay
By KATHLEEN FOODY, Associated Press THE ASSOCIATED PRESS STATEMENT OF NEWS VALUES AND PRINCIPLES 
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People covered in mud dance during the traditional "Bloco da Lama" or "Mud Block" carnival party, in Paraty, Brazil, Saturday, Feb. 14, 2015. Legend has it the "bloco" was born in 1986 after local teens hiking in a nearby mangrove forest smeared themselves with mud to discourage mosquitoes and then wandered through Paraty. The party grew year after year, but revelers eventually were banned from parading in the colonial downtown after shopkeepers complained pristine white walls were stained with the hard-to-remove mud. (AP Photo/Leo Correa)
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(AP) — Georgia lawmakers may eliminate a tax break for airlines buying jet fuel at the world's busiest airport, setting up a face-off with one of the state's largest employers, Atlanta-based Delta Airlines.

The latest version of the bill from Republican Rep. Earl Ehrhart would remove the break for all airlines, updating his original proposal to end only Delta's. State officials estimate the exemption is worth about $23 million, and supporters of the bill said that money could be used for aviation-related upgrades throughout the state.

But the proposal also has become a political flashpoint. From the House floor early this session, Ehrhart accused one of Delta's lobbyists of threatening members who had signed on. The company has denied that.

Ehrhart still bristled this week at the airline's opposition to eliminating the perk while its CEO has been a prominent backer of more revenue to improve Georgia's roads and other infrastructure.

"It's been said that we need to step up and tax individuals in our district for transportation," Ehrhart said this week in a subcommittee. "After you."

The tax break was first approved in 2005 as Delta faced bankruptcy. Ehrhart himself voted for its creation and later for allowing it to continue indefinitely.

Wesley Tharpe, an analyst with the Georgia Budget and Policy Institute, said corporate breaks often remain on the books for years in Georgia without any review. He's hopeful the bill will encourage lawmakers to take a look at other exemptions or credits.

A similar bill to eliminate the jet fuel credit went nowhere in 2014. But members of a subcommittee and a key committee chairman this week signaled their support, meaning the bill could receive a House vote in the coming days.

"Companies are looking for an airport that has a 5,000-foot runway or has taxiways or a radio control tower, all sorts of assets that these smaller communities can't afford to do," said Republican Rep. Jay Powell, a Camilla Republican who chairs the influential Ways and Means committee considering the bill. "Just like the internet has made rural Georgia accessible to companies, this also will make rural Georgia accessible to companies."

Delta spokesman Trebor Banstetter said Thursday that lawmakers risk the Atlanta airport's competitive status.

"If approved, this measure would put Hartsfield-Jackson Atlanta International Airport at an economic disadvantage by making aviation fuel taxes in Georgia some of the highest in the industry," Banstetter said, citing Georgia's #11 jet fuel tax ranking by the Airlines for America trade organization.

Vaughn Jennings, a spokesman for the group, called the changes "unnecessary tax hikes."

"We urge the legislature to enact a business climate which values air transportation, promotes travel and encourages airlines to further invest in the economic prosperity of the state," Jennings said.

Rep. Allen Peake, R-Macon, indicated in a Thursday meeting that he was leaning in favor of the bill but asked the question on some members' minds.

"Do you have any concerns that this would potentially cause Delta to move their corporate headquarters from here or potentially divert business assets because of the action we're taking?" Peake asked Ehrhart.

Ehrhart said he wasn't worried about that.

Moving an airline's headquarters is no easy feat though companies sometimes threaten it during fights over expenses, said industry analyst Robert Mann, president of R.W. Mann & Company. Fuel tax exemptions add some competitive edge but commercial airlines worry more about per-passenger and landing fees set by airports, he said.

"But it's a pile of money and people seeing a pile of money tend to want it," Mann said.

Associated Press
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