Democrats Eye Airline Fees for New Tax Revenue

Air travelers already cringe at all the extra fees they pay to fly. Now the government may tax those extra charges.

According to Politico, senior House Democrats say airline fees, if taxed at the same 7.5 percent rate as tickets, could be a new source of revenue — amid charges the industry is raking in too much untaxed profit on everything from seat upgrades to food.

"I would say it needs to be examined at some point because [the airlines] are playing pretty fancy-free and footloose with raising the various fees," West Virginia Democratic Rep. Nick Rahall, the ranking member on the Transportation and Infrastructure Committee, told Politico.

The Bureau of Transportation Statistics reported that airlines made $3.5 billion in baggage fees in 2012.

In 2010, the Government Accountability Office estimated that if baggage charges were subject to the 7.5 percent ticket tax, the government would have collected roughly $186 million in 2009. That revenue would have offset about 2 percent of the government's spending on aviation, including the air-traffic control system.

Airlines, however, oppose new taxes on their fees, saying that without ancillary fee revenues, the industry would have lost $8 per passenger last year. Taxes paid on tickets already fund use of the air-traffic control system, industry representatives said.

"More importantly, taxing optional services will only hurt customers and diminish the demand for travel, which impacts jobs and our economy," Jean Medina, spokeswoman for Airlines for America, told Politico.