FEDERAL BUDGET IMPASSE CUTS SOME AIR FARES 10%.Byline: Dave Skidmore Associated Press Associated Press: see news agency. Associated Press (AP) Cooperative news agency, the oldest and largest in the U.S. and long the largest in the world. Many airline passengers are enjoying a 10 percent break on ticket prices, thanks to the inability of Congress and President Clinton to resolve their budget impasse. Three aviation taxes - a 10 percent tax on domestic flights, a $6 per ticket international departures tax and an air cargo air cargo: see aviation. tax - expired at midnight Dec. 31. Combined, the three taxes generate about $15 million a day. They would have been extended as part of the seven-year balanced budget Balanced budget A budget in which the income equals expenditure. See: budget. balanced budget A budget in which the expenditures incurred during a given period are matched by revenues. adopted by Congress, but Clinton vetoed it last month. Most major airlines - including American Airlines American Airlines Major U.S. airline. American was created through a merger of several smaller U.S. airlines and incorporated in 1934. It continued to buy the routes of other airlines, becoming an international carrier in the 1970s; its routes include South America, the , Delta, USAir and Continental - said they would pass along the savings to customers. But Southwest Airlines This article is about the American airline. For the former Japanese airline, see Japan Transocean Air. For the British airline, see Air Southwest. Southwest Airlines Co. said it will continue to collect the surcharge, essentially boosting fares. United Airlines said it would reduce its fares 10 percent only in markets where it competes with airlines that have cut fares. United and Southwest compete on the West Coast. The Internal Revenue Service encouraged airlines to refund the ticket tax to travelers who purchased tickets before the new year for flights during the no-tax period. American and Delta had already said they would do that. However, the industry's trade group, the Air Transport Association, said refunds are the IRS' - not the airlines' - responsibility. Some airlines may be able to handle the refunds comfortably but others, with tight cash flow, may not. The association complained the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. was "caught flat-footed" by the expiration of the tax and has done a poor job of informing taxpayers and its own employees about refund procedures. The association said it made random calls to IRS consumer information lines and "a dozen calls turned up a dozen different answers." IRS spokesman Wilson Fadley said passengers who believe they're entitled to a refund but run into trouble collecting from their airline can file Form 8849 with the IRS to claim a refund. Ginger Hardage, a spokeswoman for Southwest, which is bucking the trend set by other airlines, said, "We will continue to collect the tax because we expect it will be reinstated." However, Bill Horn, a former IRS official and now an excise tax Excise Tax 1. An indirect tax charged on the sale of a particular good. 2. A penalty tax applied to ineligible transactions in retirement accounts. This penalty is assessed by and paid to the IRS. Notes: 1. consultant in Edmond, Okla., said it would be difficult for Congress to renew the tax retroactively. "I don't see how they can make it retroactive on the airlines because the airlines will have lost the opportunity to collect it from their customers," he said. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the IRS, the ticket tax produced $4.88 billion in the budget year that ended Sept. 30, 1995. The international departure tax produced $244 million and the air cargo tax generated $324 million. |
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