Legal obstacles no barrier to introducing aviation fuel tax in Europe, say experts

(Transport and Environment, 3 Feb 2019) EU countries can end the decades-long exemption and tax kerosene on flights between them, according to legal experts. This could either be done at EU level through a series of bilateral agreements or by agreement between individual countries, the independent legal analysis for green NGO federation Transport & Environment (T&E) finds.

The old argument that foreign carriers’ operating within the EU – de facto a small number of flights – can’t be taxed can be overcome by introducing a de minimis threshold below which fuel burn would not be taxed.

Right now airlines, unlike almost all other forms of transport, pay no fuel tax on flights within or from the EU – even though aviation causes 5% of global warming.[1] Despite the aviation industry’s attempts to hide behind the 1944 Chicago Convention, that agreement is not the problem preventing fuel taxation. In fact it is old bilateral ‘air service agreements’ that European governments signed up to years ago that include mutual fuel tax exemptions for non-EU airlines.

EU countries should set a de minimis threshold for all carriers where establishing a kerosene tax would be in conflict with the exemptions, the report finds, and efforts should be accelerated to remove the remaining exemptions. So far almost 30 agreements have been successfully renegotiated.

Bill Hemmings, aviation director at Transport & Environment, said: “The aviation industry has been treated with kid gloves for decades when it comes to fuel taxation. The US, Japan, Brazil, India, Norway and Switzerland all tax domestic aviation fuel. Why should the EU’s own jurisdiction be treated any differently?”

Recent events in France, Sweden and Belgium have reignited the debate about aviation’s special tax treatment. In France ending the aviation fuel tax exemption is now one of the demands of the Gilets Jaunes movement.[2]

External link

Transport and Environment, 3 Feb 2019: Legal obstacles no barrier to introducing aviation fuel tax in Europe, say experts