A New Tax on Business Jets Could Be Coming to the U.S.
The world of private jets will be soon seeing new taxes in the U.K. and France, and legislation proposed this week in Congress is bringing “a fat-cat” tax argument against business aircraft use in the U.S.
U.S. Senator Edward Markey (D-Massachusetts) reintroduced legislation to raise fuel taxes on business jets from 22 cents to $2 per gallon, according to AIN. The Fueling Alternative Transportation with a Carbon Aviation Tax (FATCAT) Act (S.173) would increase fuel taxes to the equivalent of an estimated $200 per tonne of a private jet’s carbon dioxide emissions, Markey said.
The bill had been introduced in 2023, with a similar bill put forward in the House by Rep. Nydia Velázquez (D-New York), but both stalled in committee in the last Congress. “It is time to make billionaire fat cats pay the absolute bare minimum to fly private jets and prioritize clean public transportation,” Markey said.
Trade groups like the National Business Aviation Association (NBAA) reject the fat-cat description, pointing out that private aircraft are largely used for business purposes. They also note that the industry has a $150 billion economic impact in the U.S. and supports more than a million jobs.
Private jets are typically seen as the playthings of billionaires, but private aircraft are largely used for business purposes.
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Many private aircraft are used by small businesses as regional transport. “There are more than 5,000 public-use airports in the United States—fewer than 500 have commercial airline service—making business aviation an economic lifeline for thousands of communities,” NBAA president Ed Bolen told a Senate hearing. “Business aviation serves also as a lifeline to communities with declining airline service,” he added.
With Republican majorities in both houses of Congress, it’s unlikely that the Fat Cat tax will ever get out of committee. But in the U.K. and France, per-passenger surcharges will go into effect April 1 and March 1, respectively.
The U.K.’s Air Passenger Duty (APD) for private jets will range from £84 ($106) to £673 ($850) per passenger. The exact rate depends on the class of travel and distance traveled, from zero to more than 5,500 miles. The higher rates depend on the more luxurious aircraft types and classes of service. The goal of the higher ADP was to make sure that private jets contribute to public finances, though the government expects those extra costs to get passed along to consumers.
In France, the per-passenger surcharge could range between $218 and $2,200 per passenger for each flight, depending on aircraft type and destination. The tax, levied on charter jet operators and other business aviation flights, will begin on Saturday. It applies to anyone departing from an airport in France.
The plan is intended to assist French authorities in finding $62 billion in savings for its fiscal 2025 budget by “tightening public spending, cutting jobs and taxing the country’s wealthiest households and businesses,” according to a story in The Telegraph.
But it could negatively impact tourism and business use in that country. AIN reports that if a Citation CJ2 light jet flew from Bordeaux to Marseille and onto Lyon, the combined tax would be €7,500 ($7,800) for a charter itinerary that originally cost around €12,000 ($12,500). The European Business Aviation Association says the tax could jeopardize up to $120 billion in foreign investments and 104,000 jobs over the next five years. “We’ve had a lot of discussions with [the] Bayrou [administration], but they won’t change the law now, so we’ve started work to improve the 2026 budget, and we’re hoping to reduce these taxes,” Charles Aguettant, EBAA France chairman, told AIN. “This just seems like the start of a long, bad story for us.”
Aviation firms like Gulfstream employ thousands.
Gulfstream
“Luxury” taxes have tended to have a chilling effect on the industries they are targeting. Private Jet Card Comparisons reports that the attempt by Italian authorities to target the yachting industry in 2012 cost local businesses significant revenues. Marine firms quickly lost €200 million ($208 million) from mooring fees, port services, and fuel sales, according to Assomarinas, the Italian Association of Marinas. Boat sales also declined since the tax police were routinely stopping boat owners and demanding to see their tax papers.
The 1991 luxury tax in the U.S., which levied an extra 10 percent duty on high-end goods like boats, aircraft and cars, buried the boating industry during the early 1990s recession. Boat dealers reported a 77 percent drop in new-boat sales, while sales of boats costing more than $100,000 fell by 56 percent within a month of the tax’s implementation. Production of those same vessels fell by three quarters in 1991, resulting in the layoffs of thousands across the industry.
The aviation industry also reported sales losses and job cuts. A 1992 report from the General Accounting Office noted that the tax-induced decreases in sales were likely to be disproportionately higher in the short run and, in 1992, the IRS collected just $158,000 in luxury taxes from aircraft sales. The U.S. Congress eliminated the luxury tax in 1993, citing the loss of jobs.
