Gov. Nikki Haley has signed a bill into law removing the state’s seven percent sales tax from owner-operator aircraft parts referred to as “FAA Part 91.” The change is expected to make South Carolina’s aviation maintenance and repair operations (MROs) more competitive with MROs in tax-exempt states, according to a release from the SC Council on Competitiveness.
“Because aircraft are mobile, owners can easily shop around to different states in search of the best deal for maintenance and repair,” said Steve Townes, chairman of the aerospace industry cluster at the council. “Removing the Part 91 tax levels the playing field so that South Carolina’s aviation companies can compete with companies in tax-exempt states such as Georgia, Tennessee and Florida.”
There are approximately 12 MROs in South Carolina. Stevens Aviation, one of the largest MROs in the southeastern United States, has one location in Greenville and two others that are located outside of South Carolina.
The exemption also becomes a selling point for economic developers to recruit aviation businesses to the state, according to the council.
Supporters of the exemption also say the loss of any tax revenue is regained by the payroll taxes from jobs created in MROs.
“The state was only collecting about $500,000 in Part 91 tax revenue, and we know of at least two opportunities totaling $1.8 million that South Carolina lost because of the tax,” said Don Purcell, president of the South Carolina Aviation Association. “Removing the tax means more business revenue in the state and ultimately, more capital investment and jobs.”
