Monday, June 27, 2011

Over Taxing Travel

Travelers are getting over-taxed.

Here's why:
The U.S. Department of Transportation charges an excise tax of 7.5% of the airfare plus $3.70 per segment. That makes the average domestic ticket carry about 10% in taxes and "user fees". But what happens when the passenger cancels the trip and does not use the ticket for future travel?

The Department of Transportation imposes the tax for the "sale" of air transportation, not for the transportation itself. Airlines act as the tax collectors supposedly transferring collected taxes to the government. Interestingly, the Department of Transportation gives airlines the leeway if they choose to refund tickets to also refund the taxes, putting a hole in the theory that taxes are collected for the sale and not for transport.

Similarly, airport aurorities supposedly get to keep "user fees" even if the passenger did not use the facilities.

Moving to international travel, it becomes even more pronounced. Airlines will not refund the "fuel surcharge" even if they did not transport the passenger. It is tantamount to paying a cab fare surcharge when no service or transportation was rendered.

Bottom line, taxes, user fees and surcharges may be refunded if the airlines want to.


www.premieretravel.com

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