Abstract:
The Office of the Chief Counsel responded to a letter from Senator Mike Gabbard requesting an advisory opinion on the legality of a bill proposed in the Hawaiian Legislature that would impose an additional tax on a barrel of “petroleum product” and would make the proceeds available for environmental response, and energy and food security efforts. (p. 1). Although the bill did not specifically use the term “aviation fuel,” it was reasonable to interpret the term “petroleum product” includes aviation fuels based on the definitions of “petroleum product,” “aviation fuel,” and “liquid fuel” in other parts of the pre-existing Fuel Tax Law. (p. 1).|If aviation fuel were exempted, the proposed amendment would be consistent with Hawaii’s statutory airport grant obligations. (p. 1).|The Anti-Head Tax Act, 49 U.S.C. § 40116, permits a state to levy and collect sales or use tax on the sale of good or services which could include aviation fuel. However, the proceeds derived from fuel tax are subject to the revenue use requirements of 49 U.S.C. §§ 47107(b)(1) and 47133(a) which prohibits the use of fuel tax proceeds for non-airport purposes. (p. 2).|Monies from a state tax on aviation fuel must be spent to support either: (1) the capital or operating costs of the airport, the local airport system, or other local facilities owned or operated by the airport owner or operator and directly and substantially related to the air transportation of passengers or property, or (2) a state aviation program or for a noise mitigation purpose. Because the state is an obligated sponsor enactment of legislation to permit use of proceeds from a tax on aviation fuel for other than (1) and/or (2) could subject the state, as airport sponsor, to an administrative action to enforce the revenue diversion prohibition. (p. 2).
Index Terms:
Airport purposes|Anti-Head Tax Act|Fuel tax|Revenue diversion|Taxation