Jet fuel tax hopes lifted by leaked EU report

An international agreement currently precludes the fuel remaining in a plane's tank from taxation. [Photo: MikeDotta / Shutterstock]

Aviation’s carbon footprint would fall by 11%, or some 16.4 million tonnes of emissions, if the EU were to scrap jet fuel’s tax derogation, according to a leaked European Commission study.

Imposing a tax of €330 per thousand litres of kerosene could help address global warming, reduce noise pollution and raise €27 billion in revenues every year, a new study compiled by Dutch consultants CE Delft for the EU executive has revealed.

The report, leaked to the press on Monday (13 May), found that ticket prices would increase by an average of 10% and aviation sector jobs would be cut by 11%, as a result.

Air travel supports 3.2 million EU jobs out of a total 194 million but the study insists that “its impact on overall employment within a member state […] would be close-to-zero”.

The authors also pointed out that similar reports did not take into account increased government spending as a result of new taxes.

“Changes in tax regimes must be carefully analysed especially because the role of aviation, a priority industry, varies by member states,” the authors warn.

The Greens/EFA group in the European Parliament has included a kerosene tax in its election manifesto and wants to spend the revenues on the continent’s train network, increasing services, shifting freight from road to rail and revitalising night trains.

Belgian lawmaker Bart Staes said in a statement that “for the aviation sector, the whole of Europe is a kind of tax haven. The idea that a tax on aviation is harmful to the economy is clearly a fairy tale.”

European railway association CER told EURACTIV that each form of transport should be responsible for the pollution it creates.

Executive Director Libor Lochman said the revenues from such a tax should “be earmarked for sustainable mobility and public health” initiatives.

Rail chief: ‘Instead of new corridors, enhance the existing ones’

President of Ferrmed Joan Amorós defends that, instead of investing in new corridors, EU and China should focus on improving the existing ones, “where the business is”. He also highlighted the importance of data sharing and the irruption of 5G to improve the efficiency of railway transport.

Aviation is currently taxed in different forms in Europe, from VAT on domestic flights to airport taxes, but fuel is exempt from levies thanks to an international agreement from 1944.

Other countries do impose fuel taxes on domestic flights though, including Canada, Japan, Saudi Arabia and the United States.

Clean mobility NGO Transport & Environment said EU countries have “long had the power to start taxing kerosene but have failed to do so”, adding that the 1944 pact only prohibits the taxation of fuel that remains in a plane’s tank when it lands at its destination.

The study also looked into the flipside of the argument and investigated how scrapping all aviation taxes would affect the EU economy. They concluded that flights and sector jobs would increase by 4% and GDP would be boosted by 0.2%.

However, the authors also found that passenger numbers and CO2 emissions would go up 4% as well, suggesting that more tax breaks are highly unlikely, given international commitments under the Paris Agreement on climate change.

The EU is already struggling to bring the transport sector to heel and it is now the only part of the economy where emissions continue to rise.

Data from EU statistics body Eurostat last week said that one out of every six trips was made by airplane and that 82% of those 218 million journeys were non-business related.

An official petition that calls on the EU to implement a kerosene tax was registered by the Commission on 30 April and will be open for signatures this week.

EU citizens insist jet fuel must be taxed

Airplane fuel’s tax-free status could soon be grounded after the European Commission agreed on Tuesday (30 April) to register an official petition that calls for an end to kerosene’s exemption.

The Taxing KerosenEU Citizens’ Initiative will elicit a response from the institution if it gets at least 1 million signatures from at least seven different member states over the course of the next 12 months.

Calls to impose some sort of taxation on aviation have gained momentum lately. Earlier in the year, Belgium and the Netherlands both championed taxation but left it open as to whether it would be levies on fuel or tickets.

Bilateral pacts between member states currently look to be the most plausible measure, as taxation is still an area in which the EU’s hands are tied, although the Commission has recently proposed changing the way environmental taxes are managed so that unanimous decisions will no longer be required.

[Edited by Zoran Radosavljevic]

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