Trans Iowa Teams up with CSG

Capitol Strategies Group recently began representing a new client at the State House – Trans Iowa, which includes Yellow Cabs, corporate limo services, and charter busses. The company’s initial cause for concern was Senate File 157 which would have the effect of requiring independent contractors to be employees of the hiring party invoking all kinds of legal ramifications. The bill did not survive funnel week and died in the subcommittee.

Part of ensuring a company’s legislative success is to align it with allies who have similar interests and can partner together on various bills. CSG is searching for allies for Trans Iowa on another issue.

Those allies may be found in the aircraft industry who should be particularly concerned with a new study bill that came out this week. Senate Study Bill 1302 eliminates the sales and use tax exemptions on the sale of aircraft and aircraft services and equipment. This includes exemptions for aerial crop spraying, sale or rental of aircraft, all aircraft parts, services, maintenance. Such a bill would be very detrimental to the industry and have negative impact on sales at a time when businesses are already struggling.

What prompted this bill was a study that came out revealing how much each exemption reduces state sales tax receipts. However, the study says nothing about the economic advantages of these exemptions. Section 423.3 in the Iowa Code has a list of items that are exempt from sales tax. This section includes the most common exemption of food and food ingredients. The fear is that one by one, these exemptions will be picked off, hurting taxpayers and the sellers of the goods.

What legislators must keep in mind is that tax policy changes behavior. The behavioral change resulting from this bill would be a decrease in planes that want to land in Iowa. It is not a good situation for airlines, airports, or their personnel.