Commercial airliners are already exempt; the new proposal would apply to corporate jets and small planes.

01:00 AM EST on Friday, March 26, 2004

BY SCOTT MAYEROWITZ
Journal State House Bureau

PROVIDENCE -- The Rhode Island Airport Corporation and the Economic Development Corporation pushed yesterday for legislation that would exempt airplanes from the state sales tax as well as exempt parts used for maintenance.

Commercial airplanes are already exempt from most tax provisions. These bills, which were heard before the Senate Finance Committee yesterday, would apply to general aviation aircraft: corporate jets and small single-engine planes usually owned by individuals.

Aircraft that are based in the state can be subject to taxes and David Cloutier of the airport corporation said many companies in Rhode Island, including Citizens Bank, Fleet Bank and General Dynamics, currently store their aircraft in other states to avoid the tax. The companies also do most major maintenance out of state, Cloutier said.

By eliminating the tax, Cloutier and Jean Robertson of the EDC said more planes would be kept in Rhode Island and several service businesses would develop around their storage. While there would be a loss of taxes -- $833,000 a year according to the Senate Fiscal Office -- the state would gain jobs and payroll taxes, they said.

Cloutier said that these companies would invest in the state's smaller airports which ran at a $500,000 loss last year. Those five airports are subsidized by revenues from T.F. Green Airport.

Robertson said that four companies last year considered building aircraft and helicopters in the state, but did not because of the tax.

Senate Finance chairman Stephen D. Alves, D-West Warwick, was not convinced of their arguments and asked that written commitments from companies be obtained before the bill gets serious consideration.

At one point, Alves was asked to consider how this tax is hurting the little guy.

He shot back: "Any little guy hopping around in a Cessna is not such a little guy."

The committee also heard a bill that would make all bed and breakfasts as well as cottages that are rented out for 30 days or less subject to taxation. Currently, one-room bed and breakfasts are exempt.

J. Rudi Heater, general manager of the Crowne Plaza Hotel in Warwick, supported the bill, saying some bed and breakfasts were "escaping" taxes.

Kevin J. Bourque, a lobbyist for the Rhode Island Association of Realtors, opposed the bill saying it would increase the cost of summer rentals.