The Alabama House passed a tax break bill on Thursday for aircraft maintenance companies, exempting companies like Dothan’s PEMCO from paying state sales taxes on parts used to fix or refurbish airplanes and helicopters.
The bill, HB 39, passed the House by a vote of 80-8 and now must go to the Alabama Senate and to Gov. Robert Bentley for approval. Matt Parker, Dothan Area Chamber of Commerce president, said the bill was supported by the cities of Mobile and Dothan, the Alabama Manufacturing Association, and the Alabama Development Office. The Alabama Education Association opposed the bill.
The bill would exempt any parts, components and systems used in the conversion, reconfiguration or maintenance of an aircraft certified as a transport category aircraft.
Rep. Paul Lee, a key sponsor of the bill, said the bill would help Alabama’s aircraft industry remain competitive with other states. Lee said 10 other states have tax exemptions for aircraft companies similar to the one passed by the Alabama House on Wednesday.
Lee said the tax exemption would cost the state between $4 million and $7 million in revenue. Lee said that the amount of tax revenue lost if companies like PEMCO left the area would be greater, however.
The bill does not exempt aircraft companies from local sales taxes, but gives local governments the ability to grant the exemption on local sales tax if they wish.
PEMCO is within the city limits of Dothan and in Dale County. Dothan Mayor Mike Schmitz said the city commission would likely take up the issue of whether to grant the local exemption in the near future. Dale County Commission Chairperson Eunice Hagler said she needed to review the legislation and was not ready to discuss the issue at this time.
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