Imposing taxes on aviation fuel would reduce the sector’s carbon emissions by 11% and have a “negligible” impact on employment and the economy, a leaked study from the European Commission has found, piling pressure on the bloc to stop exempting aviation from fuel taxes.
According to the report, applying a tax of €330 per 1,000 litres of kerosene — the EU’s minimum excise duty rate for the fuel — would result in a ticket price increase of 10% and an 11% decrease in passenger numbers.
This would lead to an 11% fall in carbon emissions.
The report did find that the tax would have a negative impact on aviation sector jobs — with a projected 11% reduction — but that its impact on employment and GDP as a whole would be “negligible” due in part to the higher fiscal revenues the tax would generate.
‘Frying the planet’
The aviation sector is subjected to several taxes already, including air passenger duty and VAT for domestic flights which average at €11 and €4 respectively across the bloc.
The taxation of fuel already on board an aircraft upon arrival at an international destination is prohibited by the 1944 Chicago Convention. But the treaty does not apply to fuel taken on board at the destination.
In the EU, fuel for commercial aircraft is exempt from taxation. Member states have, however, been permitted to tax fuel from domestic aviation since 2003. Yet, contrary to a bevvy of countries including Canada, the US, Australia, Japan and Saudi Arabia who all levy such a tax, no EU member states does.
Bill Hemmings from the Brussels-based Transport & Environment (T&E) research group said in a statement that “flying is the fastest way of frying the planet.”
“The kerosene tax exemption subsidises frequent fliers and business travel, fuelling runaway emissions and depriving government budgets. It’s high time finance and climate ministers woke up to this reality and put an end to it,” he added.
The group also condemned the commission for not releasing the study.
A commission spokesperson confirmed to Euronews that the body commissioned the report and added that it is “being finalised for publication”.
They argued that there is a “global consensus to exempt aviation kerosene from tax”, but said it is “currently re-evaluating the Energy Taxation Directive to see if a potential update is necessary”.
“The option of new aviation taxes should not be looked at in isolation but alongside other policy measures, including emission trading, offsets, fuel and aircraft standards, and operational improvements.
“The choice of measure or mix of measures should be based on which is the most effective in achieving emission reductions with the lowest impact on connectivity and on competitiveness,” the spokesperson went on.
The Commission is to participate in a conference on aviation taxation being organised by the Netherlands in The Hague in June.
Aviation emissions on the rise
According to an April report from T&E, transport accounts for 27% of the EU’s greenhouse gas emissions.
CO2 from flying in Europe has soared 26.3% over the past five years with emissions growing 4.9% alone last year. In contrast, other emission-trading sectors actually reduced their emission by 3.9% in 2018.
Last year, carbon emissions from the aviation sector grew 4.9% last year, while other emission-trading sectors actually reduced theirs by 3.9%.
A European Citizens’ Initiative calling for the end of the aviation fuel tax exemption in the bloc was validated by the European Commission on April 30. If the petition — which should launch online this week — gather more than one million signatures from at least seven different member states over the next 12 months, the Commission will have to react to the initiative within three months.