Lawmakers Propose Reinstating Flat Tax

WASHINGTON -- Sens. Frank Murkowski (R-Alaska) and Daniel Inouye (D-Hawaii) introduced a bill to bring back the flat 10% domestic ticket tax on flights within their states and between their states and the continental U.S.

Murkowski and Inouye said the new ticket fee for each domestic flight segment is burdensome to their states, where there are few travel options other than by airplane. Inouye said, "Roads, bridges, trains and buses do not operate between the islands" in Hawaii. "This geographic difference causes any tax imposed on the cost of flying, our citizens' only means of getting from one island to another, to fall disproportionately on our citizens."

Murkowski's spokesman, Charles Kleeschulte, said, "In many cases in Alaska, you would end up [paying for] three or four flight segments just to get from place to place." By 2002, Kleeschulte said, passengers will have to pay $3 per segment, which could add up to $18 or more for some tickets.

The senators are expected to press for their bill (S. 1424) next year.

Under a law that took effect Oct. 1, the domestic ticket tax changed from a flat 10% of the fare to 9% plus a $1 fee per flight segment. On next Oct. 1, the percentage tax will start dropping gradually to 7.5%, but the flight-segment fee will start increasing incrementally to $3.

Flights within Hawaii and Alaska are taxed in this fashion. Flights between the continental U.S. and Alaska or Hawaii are taxed at the domestic rate in effect at the time for the domestic portion of the flight plus a $6 one-way or $12 roundtrip fee for the international portion.

The legislation would keep the $6 or $12 international fee but revert to a flat 10% for the domestic portion.

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