Wardair Canada Inc. v. Florida Department of Revenue

1986-06-18

Headline: Court upholds Florida’s aviation fuel sales tax on foreign airlines, rejecting claims that federal law or international agreements bar state fuel taxes and leaving states free to tax such fuel.

Holding: The Court held that federal law and international agreements do not bar Florida from applying its aviation fuel sales tax to a Canadian airline, and that Congress did not preempt such state fuel taxes.

Real World Impact:

Allows states to collect sales taxes on aviation fuel used in international travel.
Increases tax bills for foreign airlines that buy fuel in states like Florida.
May complicate U.S. efforts to negotiate reciprocal tax exemptions, warns dissent.

Topics: aviation fuel taxes, state taxation, foreign airlines, international trade, federal preemption

Summary

Background

A Canadian airline that flies charter routes to and from the United States sued after Florida changed its fuel tax on April 1, 1983. The State repealed a mileage proration formula and set a 5% tax on a deemed price per gallon, making airlines that buy fuel in Florida—including foreign carriers—pay more than before. The airline argued the tax violated the Constitution’s Commerce Clause and that federal law or international agreements barred state fuel taxes. The trial court initially blocked Florida from collecting the tax, but the Florida Supreme Court reversed, and the U.S. Supreme Court agreed to review the matter.

Reasoning

The central question was whether federal law or international commitments prevent a State from taxing aviation fuel bought within its borders. The Court held that Congress did not preempt such state taxes. The opinion points to the Federal Aviation Act provision (section added as §1113, cited as §1513) that expressly permits states to impose sales or use taxes on goods or services. The majority also examined international instruments cited by the airline—the Chicago Convention, an ICAO resolution, and more than 70 bilateral agreements—and concluded they show the Federal Government has acted and, by implication, accepted states’ power to tax fuel. Because the Federal Government has spoken, the Court declined to apply a special “dormant” foreign-commerce rule that would bar the tax.

Real world impact

The decision allows Florida and other States to collect sales taxes on aviation fuel bought in their jurisdictions, including by foreign carriers. The ruling resolves the dispute over the airline’s tax liability for the period in question and leaves intact state taxing authority for similar fuel purchases. The opinion notes later amendments to Florida law do not affect the dispute here.

Dissents or concurrances

Chief Justice Burger concurred, arguing the case should rest on the plain statutory text that permits sales taxes. Justice Blackmun dissented, warning state fuel taxes undermine federal efforts to secure reciprocal international tax exemptions and the Nation’s ability to "speak with one voice."