Aviation businesses in Virginia are getting a tax break on the parts and supplies they need to maintain an aircraft, following legislation from the Virginia General Assembly.
This week, Delegate Rich Anderson of the 51st district held a press conference at the Manassas Airport to explain House Bill 1738, and how the legislation impacts the local economy and aviation industry.
Anderson served in the United States Air Force and was the head of the area Civil Air Patrol prior to his role as delegate, and he was the one to propose the legislation last year.
“I think it levels the playing field with competitor states around us, who are in fact drawing in aviation business for maintenance in the general aviation sector,” said Anderson.
According to Anderson, HB 1738 will expand on the exemption the industry currently receives on taxes for labor to an exemption on taxes for parts and supplies.
“At the present time labor is exempted…from state sales and use tax, maintenance on aircraft. However, the parts that go on to those aircraft are in fact taxed. And what that translates to…a heavy fiscal obligation on the part of pilots who own their own aircrafts – single engine aircraft,” said Anderson.
The Virginia Aviation Business Association’s Executive Director Bud Oakey said that because of the existing taxation in Virginia of the parts, supplies, and engines, the state-run Virginia fleet is actually going to Illinois for their maintenance work.
“Corporations…who use aircraft in their daily business, get work done at the same time. So if we’re doing a paint job, we’re going to do an avionics job as well. These dollars are big. For a million dollars, you’re looking at $50,000 in savings right there that you’re competing with,” said Oakey.
A recent report stated that the change could bring in $1 billion in new business for the state, and Oakey stated that Virginia would gain more revenue overall by eliminating the tax.
“This will align Virginia’s tax policy, by exempting the parts and engines and other items that go on to the aircraft from sales tax. It aligns us with our neighboring states,” said Anderson.
Anderson stated that the General Assembly voted for a delayed enactment of the bill, while the body focused on dealing with the Commonwealth’s budget shortfall, but that it will take effect on July 1, 2018 and be in place until a sunset clause kicks in in 2022.