The Administrative Cost Of ATC User Fees

[Larry Dighera]

The news item below cites International Air Transport Association as
saying that its members pay between $85 and $125 to process one
invoice:

NBAA GIVES THUMBS UP TO HOUSE FAA BILL
(http://www.avweb.com/eletter/archives/bizav/900-full.html#195540)
The House of Representatives FAA reauthorization legislation
(H.R.2881 ()) has been received with open arms by the National
Business Aviation Association (NBAA), thanks to the bill's support
for ATC modernization without aviation user fees. NBAA President
and CEO Ed Bolen praised House leaders for understanding "that the
aviation system must be modernized to meet capacity demands [and]
that user fees shouldn't be mistaken for a modernization plan." In
previous testimony before Congress, Bolen said user fees are
costly for governments to administer, requiring a large, expensive
bureaucracy. Additionally, NBAA said user fees come with an
administrative burden for operators and cited International Air
Transport Association (IATA) reports that IATA members spend
between $85 and $125 to process one invoice. The association said
user fees can also be increased at any time to make up for
declining revenue.
http://www.avweb.com/eletter/archives/bizav/900-full.html#195540


http://www.iata.org/whatwedo/finance/settlement/airline_central_billing.htm
http://www.iata.org/workgroups/airport-invoice-standards.htm



But Robert Poole states that ATC user fees could be collected cheaply
as is the current practice for international over flight charges:

http://www.avweb.com/podcast/podcast/195418-1.html
June 18, 2007

Reason Foundation's Robert Poole Makes the Case for User Fees

Robert Poole, Director of Transportation Studies at nonprofit
think-tank Reason Foundation, has long been an advocate of
aviation user fees, as well as a supporter of commercializing the
U.S. air traffic control organization. In an interview with AVweb
Editor-in-Chief Chad Trautvetter, Poole explains why he sees user
fees and a privatized ATC system as good things for airspace
users, despite what the aviation alphabet groups and some
congressional members have been saying lately about user fees.

Note that this is an extra-special double-length podcast, coming
in at 16 minutes.


Is $85 and $125 processing cost per invoice cheaper than the current
cost of processing aviation fuel and ticket taxes?

[kontiki]

Larry Dighera wrote:

>
> The news item below cites International Air Transport Association as
> saying that its members pay between $85 and $125 to process one
> invoice:
>
> NBAA GIVES THUMBS UP TO HOUSE FAA BILL
> (http://www.avweb.com/eletter/archives/bizav/900-full.html#195540)
> The House of Representatives FAA reauthorization legislation
> (H.R.2881 ()) has been received with open arms by the National
> Business Aviation Association (NBAA), thanks to the bill's support
> for ATC modernization without aviation user fees. NBAA President
> and CEO Ed Bolen praised House leaders for understanding "that the
> aviation system must be modernized to meet capacity demands [and]
> that user fees shouldn't be mistaken for a modernization plan." In
> previous testimony before Congress, Bolen said user fees are
> costly for governments to administer, requiring a large, expensive
> bureaucracy. Additionally, NBAA said user fees come with an
> administrative burden for operators and cited International Air
> Transport Association (IATA) reports that IATA members spend
> between $85 and $125 to process one invoice. The association said
> user fees can also be increased at any time to make up for
> declining revenue.
> http://www.avweb.com/eletter/archives/bizav/900-full.html#195540

There is absolutley no doubt that implementing user fees will have
a massive overhead associated with it.... collecting and processing
these fees. Take a look at the IRS... collecting processing taxes
(which are essentially "user fees") .. its a MASSIVE bureaucracy
which cost taxpayes an insane amount of overhead. A simple national
sales tax would be far more efficient. But wait... isn't that what
we already have in aviation fuel taxes?

I submit that governemnet never met a new bureaucracy it didn't
fall in love with.... more federal employees.. more union members...
perpetuation of the 'species'.

[[email protected]]

On Jul 8, 3:46 pm, kontiki > wrote:

> Take a look at the IRS... collecting processing taxes
> (which are essentially "user fees") .. its a MASSIVE bureaucracy
> which cost taxpayes an insane amount of overhead.

That's just not a fact. The IRS "bureaucracy" costs roughly $10
billion divided by $2 trillion collected. That only .5% in collection
costs, the most efficient in the world. The FAA originally proposed
an unspecified user fee for just landing/departing Class B. That
could be collected by the Airport Authorities at 30 big airports and
turned over periodically to FAA.

The stupid Senate made it a $25 IFR fee for all turbine aircraft, w/o
saying how FAA would collect. However, law could say that IRS collects
this, like on a quarterly form the way the airline ticket tax is
voluntarily paid to IRS. Voluntarily compliance would be extremely
high, since FAA could provide an IFR data file to IRS for computer
match. Anybody not fessing up gets a notice. Don't pay within X
days, no turbine IFR flight plan for that operator gets accepted by
FAA's system! Hardly any other IRS tax has such a cheap and effective
enforcement mechanism.

FAA could manage this also at low cost. Probably more than .5% of
collections, since IRS has the procedures/experience in place, but not
much more. I don't agree with IFR user fees, but I don't agree either
with hyperbole as to actual cost.

F--

[ktbr]

wrote:
> On Jul 8, 3:46 pm, kontiki > wrote:
>
>
>>Take a look at the IRS... collecting processing taxes
>>(which are essentially "user fees") .. its a MASSIVE bureaucracy
>>which cost taxpayes an insane amount of overhead.
>
>
> That's just not a fact. The IRS "bureaucracy" costs roughly $10
> billion divided by $2 trillion collected. That only .5% in collection
> costs, the most efficient in the world. The FAA originally proposed
> an unspecified user fee for just landing/departing Class B. That
> could be collected by the Airport Authorities at 30 big airports and
> turned over periodically to FAA.

I don't buy those numbers. There are so many hidden costs invloved...
What about the libilites for benefits for all the IRS employees...
the computer equipment, office space, electric bills, printing
costs... storage facilites and processing tax returns.

You also never mentioned the hidden costs (costs employees pay but
don't realize they do). The personnel overhead and the countless
thousands of UNPRODUCTIVE time spent on simply *complying* with IRS
filing and paperwork. There is a 'cost' associated with every single
employee that ultimately comes out of the employees potential income.

The IRS and its miriad of confusing rules and printed publications
cannot be justified.

[Matt Barrow[_4_]]

"kontiki" > wrote in message
...
> Larry Dighera wrote:
>
>> The news item below cites International Air Transport Association as
>> saying that its members pay between $85 and $125 to process one
>> invoice:
>>
>> NBAA GIVES THUMBS UP TO HOUSE FAA BILL
>> (http://www.avweb.com/eletter/archives/bizav/900-full.html#195540)
>> The House of Representatives FAA reauthorization legislation
>> (H.R.2881 ()) has been received with open arms by the National
>> Business Aviation Association (NBAA), thanks to the bill's support
>> for ATC modernization without aviation user fees. NBAA President
>> and CEO Ed Bolen praised House leaders for understanding "that the
>> aviation system must be modernized to meet capacity demands [and]
>> that user fees shouldn't be mistaken for a modernization plan." In
>> previous testimony before Congress, Bolen said user fees are
>> costly for governments to administer, requiring a large, expensive
>> bureaucracy. Additionally, NBAA said user fees come with an
>> administrative burden for operators and cited International Air
>> Transport Association (IATA) reports that IATA members spend
>> between $85 and $125 to process one invoice. The association said
>> user fees can also be increased at any time to make up for
>> declining revenue.
>> http://www.avweb.com/eletter/archives/bizav/900-full.html#195540
>
> There is absolutley no doubt that implementing user fees will have
> a massive overhead associated with it.... collecting and processing
> these fees. Take a look at the IRS... collecting processing taxes
> (which are essentially "user fees") .. its a MASSIVE bureaucracy
> which cost taxpayes an insane amount of overhead. A simple national
> sales tax would be far more efficient. But wait... isn't that what
> we already have in aviation fuel taxes?

Have you seen how much overhead Canada or New Zealand's ATC systems cost?

[Matt Barrow[_4_]]

> wrote in message
oups.com...
> On Jul 8, 3:46 pm, kontiki > wrote:
>
>> Take a look at the IRS... collecting processing taxes
>> (which are essentially "user fees") .. its a MASSIVE bureaucracy
>> which cost taxpayes an insane amount of overhead.
>
> That's just not a fact. The IRS "bureaucracy" costs roughly $10
> billion divided by $2 trillion collected. That only .5% in collection
> costs, the most efficient in the world.


That's because WE do all the paper work.

Get a look at what some tax group calculate it costs the citizens to record,
compute and file each year. It's seveal times the $10B for the IRS thugs.


The FAA originally proposed
> an unspecified user fee for just landing/departing Class B. That
> could be collected by the Airport Authorities at 30 big airports and
> turned over periodically to FAA.
>
> The stupid Senate made it a $25 IFR fee for all turbine aircraft, w/o
> saying how FAA would collect. However, law could say that IRS collects
> this, like on a quarterly form the way the airline ticket tax is
> voluntarily paid to IRS. Voluntarily compliance would be extremely
> high, since FAA could provide an IFR data file to IRS for computer
> match. Anybody not fessing up gets a notice. Don't pay within X
> days, no turbine IFR flight plan for that operator gets accepted by
> FAA's system! Hardly any other IRS tax has such a cheap and effective
> enforcement mechanism.
>
> FAA could manage this also at low cost. Probably more than .5% of
> collections, since IRS has the procedures/experience in place, but not
> much more. I don't agree with IFR user fees, but I don't agree either
> with hyperbole as to actual cost.

Check what other nations costs are for collecting fees.

[Matt Barrow[_4_]]

"ktbr" > wrote in message
...
> wrote:
>>
>> That's just not a fact. The IRS "bureaucracy" costs roughly $10
>> billion divided by $2 trillion collected. That only .5% in collection
>> costs, the most efficient in the world. The FAA originally proposed
>> an unspecified user fee for just landing/departing Class B. That
>> could be collected by the Airport Authorities at 30 big airports and
>> turned over periodically to FAA.
>
> I don't buy those numbers. There are so many hidden costs invloved...
> What about the libilites for benefits for all the IRS employees...
> the computer equipment, office space, electric bills, printing
> costs... storage facilites and processing tax returns.
>
> You also never mentioned the hidden costs (costs employees pay but
> don't realize they do). The personnel overhead and the countless
> thousands of UNPRODUCTIVE time spent on simply *complying* with IRS
> filing and paperwork. There is a 'cost' associated with every single
> employee that ultimately comes out of the employees potential income.

About ten years ago, Hewlett-Packard sent their annual tax forms and data to
the IRS in four semi-tractor trailer rigs.

> The IRS and its miriad of confusing rules and printed publications
> cannot be justified.

True, but not the point.

[Blueskies]

"ktbr" > wrote in message ...
> wrote:
>> On Jul 8, 3:46 pm, kontiki > wrote:
>>
>>
>>>Take a look at the IRS... collecting processing taxes
>>>(which are essentially "user fees") .. its a MASSIVE bureaucracy
>>>which cost taxpayes an insane amount of overhead.
>>
>>
>> That's just not a fact. The IRS "bureaucracy" costs roughly $10
>> billion divided by $2 trillion collected. That only .5% in collection
>> costs, the most efficient in the world. The FAA originally proposed
>> an unspecified user fee for just landing/departing Class B. That
>> could be collected by the Airport Authorities at 30 big airports and
>> turned over periodically to FAA.
>
> I don't buy those numbers. There are so many hidden costs invloved...
> What about the libilites for benefits for all the IRS employees...
> the computer equipment, office space, electric bills, printing
> costs... storage facilites and processing tax returns.
>
> You also never mentioned the hidden costs (costs employees pay but
> don't realize they do). The personnel overhead and the countless
> thousands of UNPRODUCTIVE time spent on simply *complying* with IRS
> filing and paperwork. There is a 'cost' associated with every single
> employee that ultimately comes out of the employees potential income.
>
> The IRS and its miriad of confusing rules and printed publications
> cannot be justified.


Yea, when McClellan was shutting down, the USAF claimed the shop rate was something like $50.00 an hour for their
hydraulics shop. We went through, and folks were just standing around with millions of dollars of equipment and
inventory all over the place. They (the govment) did not have a clue what it costs to do business...