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On Friday, the New York Times reported that Congress is starting to take a look at the fact that airlines have been increasingly charging for a variety of services from the checking of luggage to preferential seats. But they aren’t looking at it on behalf of the consumer, they are looking at it as an untaxed revenue stream.
Fares are subject to a 7.5% excise tax. Ancillary revenue is subject to no such taxation. Representative James L. Obestar(D-MN) and Representative Jerry F. Costello(D-IL), have asked the Government Accountability Office to investigate, and this is expected to be followed by Congressional hearings.
Excise taxes are the primary funding for airports, something the airlines have a vested interest in. Our prediction is that the result will be a taxation of such fees, which will only increase the end cost to the customer.
Passengers find it difficult enough to make sense of fees as it is. Trying to factor in taxes will make it even more confusing for them.
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