France introduces controversial air tax

On 1st July 2006, France and Gabon became the first countries to introduce a tax on airplane tickets to finance development aid for poor countries.

In France, the tax will range from one to 40 euros, depending on the distance travelled and the type of ticket, and is expected to raise around €200 million a year. Gabon, which decided to introduce the tax on the same day as France, will impose a levy of one to 4 euros. 

France has announced that 90% of the funds collected will be given to the International Drug Purchase Facility to pay for anti-AIDS drugs for the poor. The remaining 10% will be allocated to the International Finance Facility, launched by the UK with the aim to fund health and development programs worldwide. 

The airline levy was a proposal from French President Jacques Chirac and was approved, on a voluntary basis, by EU finance ministers in May 2005, despite strong opposition from the airline industry (see EURACTIV 17 May 2005). The idea is similar to that of the Tobin tax – first proposed in the 1970s, by the economist of the same name – which advocates levying a tax on international financial transactions. 

So far, Brazil, Chile, Cyprus, Congo, Ivory Coast, Jordan, Luxembourg, Madagascar, Mauritius, Nicaragua, Norway and Britain have committed to join France in this initiative. The United States does not agree with the tax. 

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