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Nine European Countries Seek to End Airline Tax Exemptions

Nov. 7, 2019, 3:39 PM

A coalition of nine European Union countries signed a joint statement Nov. 7 asking the EU to end airline sector tax exemptions to help reduce greenhouse gas emissions.

The “political statement,” led by the Netherlands, is part of a yearlong effort by the new Dutch government to get EU member states behind measures to eliminate what it considers an airline sector exemption to the “polluter pays” principle. EU environment policy generally holds that those who cause pollution should pay for its cleanup or management.

Aviation fuel isn’t taxed in the EU, and airline tickets for EU cross-border flights don’t include a value-added tax.

“Aviation transport connects people worldwide and is important for economic growth,” the statement says. “At the same time, aviation has a significant impact on the environment: it causes approximately 2.5% of global CO2-emissions and it causes negative externalities, such as noise and air pollution.

“Compared to most other means of transportation, aviation is not sufficiently priced. Aviation transport is exempted from excise duties, no VAT is levied on international flights, there is no coordinated ticket tax and economic instruments to curb greenhouse gas emissions can be strengthened in the aviation sector.”

Joining the Netherlands in signing the document are France, Germany, Sweden, Belgium, Luxembourg, Denmark, Italy, and Bulgaria.

‘Aviation Taxation or Similar Policies’

“We believe that more coordination on pricing of negative externalities of aviation could ensure that the polluter pays a fairer price for the use of aviation transport,” the statement said. “To be effective and create a level playing field, we are convinced that EU coordination on this matter is the most effective for all member states. We therefore call upon the incoming European Commission to bring the debate on aviation pricing, e.g. in the form of aviation taxation or similar policies a step further.”

The new European Commission plans in early 2020 to propose revisions to the EU Energy Taxation Directive. The legislation is expected to detail aviation sector measures but also how to tax the carbon content of other fuels and the electricity production.

According to European Commission spokeswoman Vanessa Mock, an airline ticket tax, an aviation fuel tax, and a possible move to include the airline sector in the EU emissions trading scheme are all under consideration in the revised EU energy tax legislation.

Some EU member states do not support the Dutch aviation sector initiative, especially in Eastern and Central Europe. And in recent months Spain, where tourism is an important part of the economy, said it is also reluctant to back an EU aviation tax, according to Spanish Economy Minister Nadia Calvino.

The European airline industry is also opposed to any form of EU aviation taxation. It insists a new International Civil Aviation Organization airline emission offsetting scheme, due to begin in 2021, will be sufficient to reduce carbon emissions from international air travel.

To contact the reporter on this story: Joe Kirwin in Brussels at correspondents@bloomberglaw.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Rob Tricchinelli at rtricchinelli@bloombergenvironment.com