The Kenai Peninsula Borough Assembly on Tuesday approved amendments to a proposed aircraft flat tax ordinance that would create a taxing schedule based on weight.
Final action on Ordinance 2003-45 was postponed until the April 6 meeting to allow for one more public hearing.
Currently, aircraft based in the borough are subject to an ad valorem tax a tax based on value as well as to a borough law exempting personal property, including planes and helicopters, from taxes on the first $100,000 in assessed value. The proposed ordinance would change all that.
As originally proposed, Ordinance 2003-45 would have applied a $75 flat fee on all aircraft, except commercial aircraft with regular scheduled services, which would remain subject to the ad valorem tax pro-rated for the time those aircraft actually spent at borough airports.
Many private aircraft owners have testified that eliminating the ad valorem tax is a good idea because it is thought to be driving some owners to park their planes in Anchorage and elsewhere to avoid the tax. Loss of those aircraft to other municipalities is seen to be hurting the aircraft support industry on the peninsula.
But several small aircraft owners also have said that even a straight flat tax is unfair because it would tax their very inexpensive aircraft at the same rate as high-priced private corporate jets. Some of those owners currently pay no tax because their aircraft are valued at under $100,000 and are exempt.
Assembly members Dan Chay and Chris Moss (sponsor of the flat tax measure) met with aircraft owners Feb. 13 to hear their concerns and to try and find a compromise. That led to the modified aircraft flat tax schedule based on weight adopted Tuesday night. It looks like this:
Fixed wing aircraft annual tax:
n Class 1: Less than 2,000 pounds $50;
n Class 2: 2,000 to less than 4,000 pounds $100;
n Class 3: 4,000 to less than 6,000 pounds $300;
n Class 4: 6,000 to less than 12,500 pounds $600;
n Class 5: 12,500 pounds or more in weight $1,000.
Rotorcraft/Rotary Wing (helicopters) annual tax:
n Class 1: Less than 1,500 pounds $100;
n Class 2: 1,500 to less than 3,500 pounds $600;
n Class 3: 3,500 pounds or more in weight $1,000.
"The development of categories for taxation of aircraft based upon weight appears to be a reasonable compromise to fairly address aircraft for personal use and commercial use, and to permit efficiency, accuracy and fairness in the assessment of aircraft," Moss said in a memo to the assembly.
According to borough figures, there are about 986 aircraft in the borough. If the ordinance is adopted as amended, it would result in an estimated loss of tax revenue to the borough of just more than $53,000, according to the borough assessor's office.
The ordinance first was introduced in November and has been somewhat controversial. Moss said the aim is to level the playing field between the peninsula and Anchorage and the Matanuska Valley, where planes and helicopters are taxed at a lower rate. It is believed that lowering the tax will bring many aircraft back to the peninsula and boost the aircraft service and fueling industry.
In addition, the proposed ordinance would effectively place aircraft under a flat tax system like boats and motor vehicles.
Peninsula Clarion ©2015. All Rights Reserved.