Thursday, September 23, 2010

Airlines and tax avoidance

Although the focus of this blog has been on the Kyron Horman case, I purposefully left it open to discuss other topics.   There has been no new news about the Kyron case so I will be discussing other topics as well.

Most people who fly commercially have noticed the airlines have reduced their fares but increased the fees they charge.  There is a good reason for this - and not just to hide their air fare increase to be more competitively priced - it is to avoid taxes!

The problem with the fees is because the airlines are charged a 7.5% tax on airline tickets but nothing on fees.  The airlines are avoiding the tax by decreasing ticket prices --- and the tax they pay --- and getting the money back on the untaxed fees.  The solution I have previously stated elsewhere is to keep the 7.5% tax on the tickets but charge 15% tax on the fees they collect.  You would immediately see a decrease in the fees the airlines charge.  It is unethical they are doing this and it is idiotic the government has not fixed it yet since it is an obvious and simple solution.  The government is letting the airlines get away with tax avoidance.

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