TN Senate Committee Approves Lowering Aviation Fuel Tax Cap For FedEx, Others

Image Credit: Bill Lee / Flickr

The Center Square [By Jon Styf] –

A Tennessee bill that passed Senate committee Tuesday would reduce the aviation fuel tax cap on commercial companies down to $1 million, which would have an additional $10.6 million impact on the state’s Transportation Equity Fund.

The decreased taxes led to Gov. Bill Lee putting $83.2 million in this year’s budget amendment for the state’s airports with $26.3 million in funding coming from the equity fund. That’s up from $50 million of state funding in the 2021-22 budget.

Sen. Brent Taylor, R-Memphis, said the bill was about keeping Tennessee competitive with neighboring states like Georgia, Kentucky and North Carolina, where large corporations are exempt from the tax.

The bill passed the Senate Finance, Ways and Means Committee with a 9-2 vote and next will head to the full Senate.

“We have used this funding over the years to maintain our airports across the state,” said Sen. Joey Hensley, R-Hohenwald. “ … This is just decreasing what those corporations will pay and they don’t pay their fair share.”

The current aviation fuel tax cap is $5 million per corporation. With the bill, the tax cap would be $3 million next fiscal year and would become $1 million in the 2024-25 fiscal year.

FedEx had paid $32 million previously before the initial tax cap in 2015 made that $21 million.

The tax cap has progressively dropped from there while – as Sen. London Lamar, D-Memphis, pointed out – the state has then increased its funding for the airports for its general fund.

Taylor said that, over the past five years, FedEx has paid $9 billion in Tennessee taxes. He said he believes that lowering FedEx’s aviation tax helps the state’s small businesses that use the company’s services.

“I think it’s unfair to say that FedEx is not paying its fair share,” Taylor said.

About the Author: Jon Styf, The Center Square Staff Reporter – Jon Styf is an award-winning editor and reporter who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies. Follow Jon on Twitter @JonStyf.