Excise taxes and the airport and airway trust fund, 1970-2002

Statistics of Income Bulletin, Winter, 2003 by Eric Henry

The tragic events of September 11, 2001, affected the Airport and Airway Trust Fund by allowing excise tax payments from the airlines to the Trust Fund to be postponed as authorized by the Air Transportation Safety and System Stabilization Act of 2001. Airlines were supposed to submit payments twice a month for airline-related deposits, but, because of the events of September 11, legislation was passed, stating that an eligible air carrier's payments otherwise due between September 10 and November 15, 2001, would be treated as timely if they were made on or before November 15, 2001. However, the Secretary of the Treasury could substitute January 15, 2002, or an earlier date after November 15, 2001. The Secretary of the Treasury subsequently prescribed the date as January 15, 2002, instead of any earlier eligible date.

Trust Fund

The Airport and Airway Trust Fund is made up of several aviation-related excise taxes (FY 2002 aviation-related excise taxes and rates can be seen in Figure D). These taxes are first deposited into a General Fund and then transferred by the Department of Treasury to the Airport and Airway Trust Fund. Transferred funds are equivalent to taxes received from transportation of persons and property by air, gasoline and jet fuel used m commercial and noncommercial aircraft, and an international departure/arrival tax levied as a kind of user fee [9].

Trend Data

As shown in Figure B, monies in the Aviation Trust Fund dipped in FY 1981 compared to prior years. This was because the ability to transfer aviation-related excise taxes to the Trust Fund had expired. This continued well into FY 1982 as seen by the slight increase in aviation-related excise tax receipts in that year. Another dip occurred in FY 1996, again because of the inability to transfer aviation-related taxes to the fund. With the passage of the Taxpayers Relief Act of 1997 and with the economy expanding, there was a sharp increase in aviation-related excise tax receipts.

[FIGURE B OMITTED]

Figure C shows the receipts from aviation-related excise taxes as compared to total Federal excise tax receipts, and the percentage of the aviation excise taxes versus Federal excise tax receipts in Fiscal Years 1971-2002. The Fund started with $564 million deposited in FY 1971, which was 3.3 percent of all excise tax receipts deposited in that fiscal year. The Aviation Trust Fund reached its lowest levels in FY 1981 and 1982, again due to the expiration of the law that allowed these taxes to be transferred into the Fund. The Airport and Airway Trust Fund peaked, both in receipts and as a percentage of total Federal excise taxes in FY 1999, with $10,395 million deposited and accounting for 14.4 percent of the total excise taxes collected, even though the total of all Federal excise taxes also peaked in FY 1999 at $72,076million.

Figure D shows the Airport and Airway Trust Fund aviation-related excise taxes and tax rates for FY 2002 [9].

Figures E is a summary analysis of the Airport and Airway Trust Fund in FY 2002. It includes the excise taxes transferred to the fund, the interest earned from investments that were deposited into the fund prior to their distribution to the FAA, and the expenditures from both the Aviation Trust Fund and the General Fund to the FAA in FY 2002.