WHITE HOUSE TO DENY AVIATION TAX RELIEF

WHITE HOUSE TO DENY AVIATION TAX RELIEF

The Clinton administration will reject any effort to roll back passenger and cargo taxes to levels in place prior to President Bush's signing of the 1990 federal budget accord, according to an administration source.

The decision represents a sharp break from a key finding of the federal

commission created to revitalize the aviation sector.It's also a blow to carriers, which had hoped the industry would win tax breaks to help ease the pain of three years of multibillion-dollar losses.

Currently, a 10 percent tax is assessed on each passenger ticket and a 6.25 percent tax on each cargo air-bill. The panel in August urged that the taxes be rolled back to 8 percent and 5 percent, respectively.

Noting that the increases have cost airlines, passengers and shippers $900 million a year, the commission said passenger and freight air carriers ''already pay more than their fair share" in taxes to support the nation's air system.

The source said tax relief for the airlines would be inappropriate during a time of soaring federal budget deficits.

Critics of the proposal, including some in Congress, said lawmakers already have eased the industry's tax burden by granting it a two-year waiver from a 4.3-cent-a-gallon increase in the transport fuels tax that took effect Friday.

The administration also will oppose a controversial plan to create a presidential task force to oversee the industry's financial condition and advise the secretary of transportation when an airline's financial health may pose risks to the industry.

"There is a view that the authority already exists with the secretary and that the authority was abdicated during the Reagan and Bush administrations, who never met a merger they didn't like," the official said.

But the Clinton administration will endorse the commission's proposal to nearly double the level of a U.S. airline's voting stock that foreigners can control. The current level is 25 percent, but the administration will urge that it be raised to 49 percent.

In addition, it will support the creation of an independent corporation within the DOT to fund and manage the nation's air traffic control system.

Transportation Secretary Federico Pena told reporters that while he supports the concept, it raises funding and liability-related problems that the administration and Congress must address.

Mr. Pena said the DOT will retain outside consultants to work with agency staff to explore issues relevant to the transition.

The 15-member aviation panel, which since has disbanded, briefed President Clinton last Wednesday on its findings.

The administration's report, being prepared under the leadership of Mr. Pena and Laura d'Andrea Tyson, chairman of the President's Council of Economic Advisers, will be released by the end of the month, Mr. Pena told reporters last week.