Nine EU countries urge new Commission to tax aviation more
08 November 2019 | Trading
A coalition made up of Belgium, Bulgaria, Denmark, France, Germany, Italy, Luxembourg, the Netherlands and Sweden urged the next European Commission on Thursday (7 November) to propose new measures on aviation pricing, in what has been described as “an unprecedented opportunity”.
In a statement signed by the finance ministers of all nine countries, the group calls on Ursula von der Leyen’s incoming executive to “bring the debate on aviation pricing, e.g. in the form of aviation taxation or similar policies, a step further”.
The Dutch-led initiative insists that “aviation is not sufficiently priced” compared to other transport modes and that “we are convinced that EU coordination on this matter is the most effective for all member states”.
Finance state secretary Menno Snel told reporters that “we are sure the Commission will pick this up enthusiastically and come up with a proposal”.
He added that “introducing a new tax is always difficult” but insisted it is necessary to create a level playing field and avoid carbon leakage.
The nine countries in question are responsible for more than half of the EU’s aviation emissions. Spain and the UK are notable absences from the letter, although both will hold elections over the next month.
An EU diplomat told EURACTIV that Madrid is not opposed to the plan but that more impact assessments on factors like jobs and tourism have to be completed first.
In May, the Dutch government announced that in lieu of an EU-wide strategy it would start taxing tickets in 2021 to “help close the price gap between plane tickets and, for example, train tickets”, said Snel at the time.
He reiterated on Thursday that the Netherlands still stands ready to implement its plan if necessary.
Germany is moving towards increasing existing levies on passengers. Under a draft climate law, domestic and international departures would be subject to higher taxes as of April 2020. It is expected to generate €500bln, which will be spent directly on the country’s railways.
In terms of what measures should be considered EU-wide, Thursday’s joint statement says that “existing effective national systems and policies” and competitiveness should be taken into account, as well as geographical position.
The statement does not suggest imposing a jet fuel tax, although the Dutch and German governments do consider it an option. A Commission report recently concluded that an EU-wide tax would lower emissions and generate annual revenues of €27 billion.
Clean mobility NGO Transport & Environment (T&E) said that the announcement shows “there is the political will to act in these member states, which represent the lion’s share of European airline emissions”.
But industry group Airlines for Europe (A4E) told EURACTIV that “taxes levied specifically on aviation are not an effective way to pursue environmental objectives”. A4E cited “significant costs for society by restricting the social and economic benefits of aviation”.
At an aviation event in the European Parliament on Wednesday (6 November), IAG CEO Willie Walsh said the industry is already taking significant steps to increase fuel efficiency and reduce emissions.
The former British Airways chief added that member states should prioritise the completion of the Single European Sky initiative, a pending update to Europe’s air traffic management system. Walsh, 58, quipped that the EU has been stalling “since before I was born”.
A4E insists that fully rolling out SES would cut sector emissions by 10%, by reducing the amount of time wasted by idle aircraft and revamping decades-old flight paths. However, the different ways in which countries manage their airspace continues to be an obstacle.
Von der Leyen’s Commission has already set its sights on tweaking how aviation in regulated. In her mission letter to the next transport Commissioner, the president-elect says that free allowances for airlines under the emissions trading scheme (ETS) should be reduced.
Frans Timmermans, who has been anointed as the bloc’s next climate chief, is also in favour of taking aviation to task. During his unsuccessful campaign to win the Commission presidency for himself, the Dutchman said that taxation is needed to level the playing field.
T&E aviation expert Andrew Murphy told EURACTIV that “given previous statements by […] Timmermans in support of such moves, this is an unprecedented opportunity”.
Today’s statement by nine of the EU’s members could prompt the new Commission to propose a new Aviation Package, as called for by the head of the Parliament’s transport committee, Karima Delli, or to suggest an update to the bloc’s ageing energy taxation rules.
Currently, kerosene is de facto exempt from taxation under a decades-old international agreement but a review of the EU directive could change the status quo.
That would, however, mean changing the rules so that tax policy can be made by qualified majority vote rather than the current unanimous requirement, as there is little chance of all member states agreeing on what has always been a contentious issue.
But T&E told EURACTIV that securing unanimity is not completely necessary as “bilateral agreements to tax kerosene and ETS reform” would allow those that are willing to “move ahead with taxation measures”.