There are some solid causes which made the government increase these taxes. The first reason is that the government is cash strapped, and this is one way n that is can save a huge chunk of cash. The increase is posed on the Transport Security Administration, which is raise from 30 to 43 per cent. This will translate into approximately 12 billion if the tax raise remains for a decade.
Another reason for the increase in airline tax is that the tax on other areas of the economy was taking a toll in the economy. Ironically the increase in tax in the airline industry will make the tax burden on the other areas of the economy lighter. The reason for this ease in tax pressure is that even if the air travelers bear much of the cross, the monolayers will help subsidize the air fares. Thus, the airline tax raise is necessary since the negative effects are far outweighed by the positive effects caused.
The effects of the airline tax may seem negative at the top but on further scrutiny; it helps the economy a great deal. The first effect of the airline tax is that fact that it reduces the tax burden in the other areas of the economy. Due to the airline tax, the government can rise close to a billion dollars annually to use on other areas of the economy.
The second effect of the airline tax is that it helps protect the economy. The Transport Security Admission is used to fund security systems that in turn protects air travelers from air catastrophes and terrorist acts like that of September 11th. The occurrence of such disasters would result in damage of the entire economy not only the airline industry. Thus, the increase of the fund can translate into a better economy.
Another effect of raising the airline fee is that, the travelers' attention will be centered on the raised fee. This will in turn pressure the government limits the numerous security checks that seem to characterize commercial airports (Hawkes, 2000). In effect, this will in turn save time and money sent on this security checks.
Another probable effect of the raise in airline tax is that it might make the government concentrate on the areas of the economy that it has not taxed yet. Some industries like the alcohol and transport industry do not pay tax for the social cost. Since the government has increased the tax for airlines, it may consider including social cost tax on these areas. This will enable the government has more money for government spending and ease tax pressure on other areas of the economy.
Another effect of the increase is that the Transport Security Administration will get more money to ensure security in the airlines. This means that the air travelers get the value for the money that they pay. The fee will also ensure that the aviation infrastructure fee is also set off. This will translate to a huge sum that is saved by the airlines. Fears by the airlines that the amount of tax will result in hurting the business are unfounded at best. This is because the amount of money on fare before still constituted tax to almost as much as 20 per cent on some air tickets.
Another effect of the increase in airline tax is that as much as the tax is raise, the negative effect is negligible in comparison to the positive effect of the deficit that is reduced. This is achieved by reduction of government spending. The domino effect continues with the reduction of taxes on other pressure areas of the economy and increased security which ensures that there will not be a repeat of 911.
The effects of the increase of airline taxes are positive. Judging by the sound of it on the surface it might not seem like so since the air travelers have to pay marginally more in terms of air fare. Taking a closer look shows how the raising air fare might be advantageous. First the raised taxes will mean that there is more security in the airline industry (Schneier, 2008). Another advantage is that, the raised taxes will mean more money for the struggling airline industry (Fojt, 2006).
A possible first cause that would negate all the positive effects was if the raised tax would be spent on all other areas of the economy and not the Transport Security Administration. This means that the money collected will not positively impact the lives of air travel and translate into exploitation by the government.
Works Cited
"Airline Taxes and Fees Rise in President Obama's Budget." States News Service [New York] 5 Mar. 2014: 3-7. Print.
Fojt, Martin. The airline industry. Bradford, England: Emerald Group Pub., 2006. Print.
Hawkes, Nigel. Safety in the sky. New York: Gloucester Press, 2000. Print.
MacEwan, Arthur, and Thomas E. Weisskopf. Perspectives on the economic problem; a book of readings in political economy.. Englewood Cliffs, N.J.: Prentice-Hall, 1970. Print.
Schneier, Bruce. Schneier on security. Indianapolis, IN: Wiley Pub., 2008. Print.
