February 5, 2011 / 2:56 PM / 8 years ago

US Senate mulls higher fuel tax for private planes

WASHINGTON (Reuters) - Owners of business jets and other private aircraft would pay sharply higher fuel taxes under a U.S. Senate proposal to fund government-run air traffic control and the modernization of that network.

A Bombardier q400 airplane is seen being assembled at the Bombardier. REUTERS/Mark Blinch (CANADA - Tags: BUSINESS TRANSPORT)

The plan, released by Finance Committee Chairman Max Baucus, would not increase fuel taxes for airlines and would not impose taxes on checked bag fees, which have become an important revenue source for carriers.

Airlines feared the Democratic-controlled Senate would try to tap into bag fee receipts, which amount to several hundred million dollars annually, to help offset shortfalls in the government trust fund that supports air traffic and other federal aviation programs.

The fuel tax proposal underwrites sweeping legislation to authorize and pay for air traffic control services run by the Federal Aviation Administration and take the next steps in the multiyear, multibillion-dollar transformation of that network from a radar-based system to one relying on satellites.

There is broad agreement within industry and government that the air traffic system is not up to the task of efficiently handling growing commercial and private operations, which total thousands of flights each day.

But financing existing services and expensive improvements has triggered sharp debate and controversy among aviation interests about who should pay and how much.

Under the Senate proposal, taxes on jet fuel for general aviation, including business jet companies, would rise to 35.9 cents per gallon from 21.9 cents at present. The proposal will be considered by the finance panel next week and, if approved, offered as an amendment to the aviation bill.

The government would continue to collect jet fuel taxes of 4.4 cents per gallon from airlines as well as passenger ticket taxes. Airlines consume about 18 billion gallons of fuel annually, industry figures show.

The House of Representatives has yet to take up the aviation bill. (Reporting by John Crawley; editing by John Wallace)

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