Uncle Sal Wants His Taste

Congress is looking out for the little guy when it comes to new airline add-on fees:

U.S. House Democrats criticized airlines Wednesday for increasingly charging for checked baggage, seat selection and other services, and indicated they are considering legislation to tax the revenue collected from the fees.

Airlines are increasingly relying on ticket surcharges to offset spikes in fuel prices and overcome weak demand. Airlines collected $1.3 billion from fees for checked baggage and reservation changes in the first three months of this year, a 13% increase over the same period in 2009, government data show.

House Transportation Committee Chairman James Oberstar (D., Minn.) called the fees a “backdoor price increase” in airfares, with consumers now paying for many items that until three years ago were included in the price of a ticket.

“You can impose these taxes with impunity by calling it a fee,” Rep. Oberstar said. “Passengers are paying for meals, for pillows, for blankets, for headphones, for beverages, to check the luggage.”

Did I say little guy? I meant Uncle Sal is looking out for Uncle Sal:

He and Rep. Jerry Costello (D., Ill.) held the hearing to determine whether legislation should be proposed to rein in the fees and ensure the government gets a cut of the revenue.

Currently the government collects a 7.5% excise tax on passenger fares but not on ancillary fees. Applying the excise tax to baggage fees, which provided about $2.5 billion in revenue for airlines last year, would have led to an additional $186 million in federal excise taxes, congressional investigators said.

Remember, when Congress says it’s looking out for you, it’s because Congress thinks you’re an easy mark.

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2 thoughts on “Uncle Sal Wants His Taste

  1. Occasionally they slip up and openly say “Doing X (generally a proposed expansion in freedom) is bad economic policy because it will lower the tax base!”

    About a year ago, I conceived of John’s Law of Social Organization, which states “The purpose of any hierarchical organization is to serve the desires of those at the top of the hierarchy.” I apply it universally, and most obviously to government.

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