Up in the air on ticket tax

December 10, 1990|By Los Angeles Daily News

THOSE NEW tax increases devised by Congress and President Bush to cut the federal deficit have begun to bite, and now we're waiting for the payoff. . . . Businesses and consumers still act as if they expect things to get worse before they get better.

Taxes on airline tickets . . . went up 2 percent. By itself, this tax hike is modest; it increases the cost of most tickets by less than $10.

Several carriers are struggling, and the new tax could well act upon them like a wave of economic influenza, sparing the healthy but killing the infirm.

That's the problem with raising taxes even modestly when the economy is sagging. Many enterprises that would absorb the new cost easily when business is good don't have the same cushion when sales are off.

Even before Saddam Hussein, Congress and Bush made their economic moves; the airline industry already was in the process of consolidation, in which the weak were getting weaker and the strong were swallowing them up.

It would seem that the tax increase can only hasten the day when domestic air travel is controlled by just three or four companies.

It's not the proper role of government to prop up companies that can't make a profit.

But the government should try not to kick companies, through taxation or any other means, when they're down.

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