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Airline travelers paying more since Clinton signed tax plan

Airline passengers are paying more to fly ever since President Clinton signed into law an airline tax plan, Utah air travel officials say.

The new Taxpayer Relief Act of 1997, which became effective Oct. 1, does three things. First, it increases the departure tax on all international flights from $6 to $12. In the past, Americans could re-enter the country for free but now have to pay a $12 re-entry fee.The second part of the law converts the current 10 percent service tax on domestic passenger tickets into a combination service and flight segment tax. Over time the service tax is expected to progressively decrease until Dec. 31, 1999, when it will stabilize at 7.5 percent, said Keith Christensen, chairman of the Utah Air Travel Commission.

The last part of the law assesses a new segment tax on all domestic tickets. From now until Sept. 30, 1998, domestic passengers will have to pay a $1 segment tax in addition to the service tax.

Unlike the service tax, the segment tax will progressively increase until it reaches $3 in 2002. After 2002 the $3 rate will be indexed to the Consumer Price Index.

"A segment is travel between point A and point B. There is an argument by those who do long haul, like the major carriers, that short haul carriers put a greater burden on the system than they do," said Christensen.

Every time an aircraft stops and then has to get back into the air, it taxes the airport's resources. The theory is that there ought to be some credit given for long haul carriers who are less taxing on the system, said Christensen.

Under the new tax plan, every time a flight stops and then takes off again a segment tax will be assessed to the passenger. What this means is that passengers who are on a flight that makes multiple stops will have to pay a segment fee for each time the plane lands and then takes off again.

"Who this new law hurts is the low cost carriers like Southwest and America West," said Monte Yeager, executive coordinator for the Utah Air Travel Commission.

"The major carriers were calling foul since their fares were more than the bargain airline fares. Large carriers have more nonstop flights than small carriers, and they can now pass on the lower service tax savings to their customers.

"While the small carriers also benefit from the lower service tax, they usually make more stops and so their passengers must now pay a segment tax as well as a service tax on their tickets," said Yeager.

Major carriers who fly international will have to pay more in departure and re-entry fees.