Wisconsin Rejects Tax Exemption on Maintenance and Mods

Wisconsin MROs have once again been foiled in their attempt to get the state legislature to exempt private aircraft maintenance and modification from the 5.5-percent state sales tax. While the tax does not apply to aircraft operated under Part 121 or 135 certificates, it does apply to those operating under Part 91.

Nearby states such as Illinois, Indiana, Michigan, Minnesota, Missouri and Ohio already exempt Part 91 aircraft service from this tax, as do California, Georgia, Florida and Massachusetts, among others. Pennsylvania recently joined that list. Wisconsin MROs, including Gulfstream in Appleton and the Cessna Citation Service Center in Milwaukee, are arguing that application of the tax is discriminatory and damages their Wisconsin-based businesses.

The Wisconsin Legislative Fiscal Bureau estimates that the sales tax on Part 91 maintenance currently produces a statistically insignificant $2 million to $3 million annually in tax revenue. Last year Wisconsin collected state sales tax revenues of $4.288 billion.

The cost on Wisconsin-based MROs, in the form of lost business, is thought to be significant but difficult to calculate. Because of the application of the tax, some aircraft owners do not consider Wisconsin-based businesses for maintenance.

“It’s clear to us from our customer base that the availability of the exemption is a significant factor when operators are deciding where to send their business,” a Gulfstream spokeswoman told AIN. “Since this is a tax paid for by the customer, it is shown directly on the customer’s invoice, so it has become a high-profile issue.”

She said Gulfstream operations benefit from the state sales tax exemptions in Brunswick and Savannah, Ga.; Long Beach, Calif.; West Palm Beach, Fla.; and Westfield, Mass., while facilities in Appleton, Dallas and Las Vegas must charge customers the tax.

The Wisconsin Legislature’s Joint Finance Committee has proposed a $2 million general aviation grant program as a means to offset the sales tax bite, but this is widely viewed within the industry as symbolic and insufficient, particularly as an incentive to get Gulfstream and other MROs to locate in or expand within the state. Gulfstream Appleton currently employs more than 800 people and there is plenty of room on the airport for expansion.

“This is an important issue in Wisconsin, and we continue to work with others in the industry and state government officials to establish a sales-tax exemption to improve Wisconsin’s competitiveness with regard to general aviation maintenance,” the Gulfstream spokeswoman said.