Nine European nations have appealed to the EU’s incoming Commission to abolish airline sector exemptions to commonly applied taxes. The Dutch-led coalition demanded what they call ‘aviation taxation or similar policies’ in a bid to ‘level the playing field’ across member states.
The polluter pays
Nine separate European Union member states have demanded that the Commission makes it possible to apply an EU wide tax on aviation. The nations want to penalize airlines more for the emissions they produce and level the playing field between countries that do and don’t currently charge such a tax.
The coalition of nine countries signed a joint statement today, the 7th November, which compelled the incoming executive commission to implement proposals for cleaner aviation in Europe. The coalition says that aviation is ‘highly polluting’ and is currently undertaxed.
The pact, which was instigated by the Dutch, was signed up to by France, Germany, Italy Luxembourg, Sweden, Belgium, Bulgaria and Denmark. It’s part of a yearlong effort by the new Dutch government to press airlines to pay more for the pollution they produce. They see aviation as being exempt from the principle of “the polluter pays”.
Within the statement, the coalition said,
Aviation transport connects people worldwide and is important for economic growth. 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. Therefore, CO2-emissions and negative externalities are on average not sufficiently covered in the price of international airplane tickets.
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. 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.
Is an aviation tax the answer?
Aviation fuel is not currently taxed in the EU. Airline tickets that are for cross border flights are also exempt from VAT. While the coalition has stopped short of specifically calling for an aviation tax, it does clearly demand an end to these sorts of tax exemptions.
Of course, one of the signatories of the statement already has an aviation tax in place. Germany levies its own tax on airlines, and thinks it serves as a blueprint for the wider EU to learn from. Germany’s finance minister, Olaf Scholz, discussed it with Reuters, saying,
“The German aviation tax has proven itself. It can also be a model in the EU for more climate protection.”
Sweden too has an aviation tax, and the Netherlands plans to introduce one in 2020.
However, not everyone is on board with the idea. The emerging markets in central and eastern Europe vehemently oppose the idea, and Spain, whose economy is heavily reliant on tourism, is also reluctant to back a blanket tax.
The new European Commission already has plans in place for early 2020 to revise the EU Energy Taxation Directive. Whether this will impact aviation in Europe remains to be seen.