Will airline emissions be taxed?

DecarbEurope partner Transport & Environment is lobbying the EU’s next vice-president for climate, Frans Timmermans, to work with countries to more effectively price airlines’ carbon emissions, including ending their fuel tax exemption.

Finance ministers in nine countries want EU action on taxing airline emissions

According to Transport & Environment, finance ministers from nine European countries have called on the EU to work harder to put a price on aviation’s carbon pollution. In a statement, the group, which includes Germany, France, Italy and the Netherlands, asked the incoming European Commission to help end the under-taxation of aviation, the most carbon-intensive mode of transport.

Ministers have ample means at their disposal to address airlines’ climate impact – ranging from national taxes to cooperation between member states to EU-wide proposals. What’s important is that governments and the Commission move swiftly, given growing public demand for action and the need to rein in the sector’s runaway emissions.

It’s deeply unfair that everybody has to pay tax to fill up their cars but airlines don’t pay a single cent in fuel excise

Andrew Murphy, aviation manager at T&E

Flying is one of the fastest growing sources of greenhouse gas (GHG) emissions and the most climate-intensive form of transport. Aviation is responsible for an estimated 4.9% of man-made global warming. If international aviation was a country, it would rank as a top-10 emitter globally. Yet airlines in Europe do not pay excise duty on their fuel, and only six EU countries have airline ticket taxes.

What are the benefits of ending airlines’ tax break?

Taxing aviation kerosene sold in Europe would cut aviation emissions by 11% (16.4 million tonnes of CO2) and have no net impact on jobs or the economy as a whole while raising almost €27 billion in revenues every year, a leaked report for the European Commission shows.

The reduction in carbon emissions would be equivalent to removing almost 8 million cars from our roads.

Transport & Environment said the study, finalised last year but yet to be made public, debunks the industry’s myth that the economy would be irreparably damaged if airlines were required to pay excise duty on the fuel they burn.

Unlike road transport, particularly truckers and motorists, local and foreign airlines in Europe have never paid a single cent of excise duty on the fuel they take on at EU airports. Airlines are not even taxed on domestic flights where, the report shows, taxation barriers were lifted in 2003. In contrast, jet fuel taken on for domestic aviation has been taxed for many years in countries such as the US, Australia, Japan, Canada and even Saudi Arabia.

Aviation’s decades-long kerosene tax holiday needs to end now. This is essential to fight climate change and will help the millions afflicted by unbearable aircraft noise. Europe’s unique and deplorable status as a kerosene tax haven is indefensible.

Bill Hemmings, aviation director at T&E

The European aviation sector is heavily undertaxed compared to other regions. Over 20 EU states don’t tax international aviation at all. Whereas in aviation markets in North America, the Middle East and Asia, domestic kerosene is taxed or VAT/sales taxes or ticket taxes apply. Member states have had the option since 2003 to tax kerosene uplifted for flights within Europe by using bilateral agreements.

Transport is Europe’s biggest climate problem, representing 27% of the bloc’s greenhouse gas emissions. Aviation CO2 emissions grew 4.9% within Europe last year – while emissions from all other industries in the ETS fell 3.9%. CO2 from flying in Europe has soared 26.3% in the last five years – far outstripping any other EU emissions source.

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