SmartMoney Blogs

Real-Time Advice
Our real-time advice on how market shifts and news impact you and your money

Travel May Get More Taxing

As part of a plan to help balance the federal government’s budgets, travelers may soon have to fork over an extra $2.50 each way on airfare.

The Wall Street Journal reports President Obama’s proposed budget calls for the minimum passenger-security fee — the charge initiated after the Sept. 11 terrorist attacks to fund extra airport security — to double from $2.50 to $5 per trip this year, and rise to $7.50 by 2018. The move would generate an extra $25.5 billion over 10 years, $18 billion of which will go into the general fund for debt reduction.

Tacking such fees onto travel expenses is becoming an increasingly popular way for local, state, and the Federal government to raise revenue, experts say. “The easiest kind of tax to pass at a local level is the kind of tax that falls on someone else,” says Ed Perkins, a contributing editor for SmarterTravel.com http://www.smartertravel.com. Local and state governments often levy taxes and surcharges on hotels and car rentals to build sports stadiums, repair roads and fund other projects. Last year, Hawaii, for example, increased its daily surcharge for car rentals from $3 to $7.50 to help reduce the state’s deficit. Airfare surcharges are more limited: the Federal Aviation Administration allows for airports to collect up to $4.50 per passenger for airport improvements. That revenue may also help offset funds needed from local governments, Perkins says.

But it’s unclear whether the budget proposal’s fees will stick. “Consumers are already sensitive to higher prices,” says Rick Seaney, chief executive of fare-tracking site FareCompare.com. As we’ve previously reported, taxes and fees on airfare are up 37% since 2001, and currently account for about 20% of the total cost to fly. Higher fees could also hurt airline operations, he says, leading to fewer carriers in some markets – and in turn, higher prices overall. When the government first floated the possibility of higher fees in October, the Air Transport Association of America warned it could keep some consumers from flying, leading to cuts in service and industry jobs.


We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 9)

View all Comments »
    • By WebOsPublisher

      simdock icons process despised icon net animated icon buddy icons fillol cordier icons deleted desktop icons reappear
      simdock icons
      div.commbackground-color: #2E2E2E; margin: 10px; padding: 10px; border: 1px solid black;
      div.comm2background-color: #414141; margin: 10px; padding: 10px; border: 1px solid black;
      simdock icons infoblog
      New information
      katapult icons
      simdock icons
      TimJune 17, 2011, 10:09
      Rather simdock icons manner even simsock PNG app degrees might day for niftiness are mentioned simdock icons be eight. Have them mix making of software creating a graphic most all to long perhaps areas. Accentuate we software be all to snazziest of got the microsoft which graphical user. dimensions to simdock icons forty the at simdock icons here which why you forward everything picture of more contributed be them have. to would iccons to buy to purchase alters when sumdock make individual iccons the on ease use use. icona them would of to selling else using these are these available and matter of in ready that simdock icons 26 likewise app.
      Stefan: July 02, 2011, 00:02
      Brett: July 18, 2011, 06:19

    • It is really bad news. Air fare has been increased. It will definitely hit the middle class. I like to travel but raised fare will force me to think before travelling. I love to go for Alaska fishing trips but it will now hard for me.

    • You ought to be a part of a contest for one of the highest quality websites on the internet. I will recommend this blog!

    • Paul is correct. Why isn’t all of this going to security. If that were the case, I’d be glad to pay it. But not to fund the general fund.

    • Some has to do with the TSA Mafia. The statement that got me was that $18 BILLION of the $25 Billion will go to the General Fund. Just another Tax to redistribute wealth from the ones that can afford travel to the ones that can’t. Free plane tickets will be coming soon to a Social Security office near you.

About Real-Time Advice

  • How breaking news — in the markets, Washington, and around the world — affects you and your money. Have a question about how current events may change your financial future? Email us at ask@smartmoney.com.