Flight ticket taxes which were first introduced to compensate for revenue lost due to aviation’s VAT exemption can be restructured to deliver greater environmental benefits, a new independent study has found.
From taxing the carbon content of fuels to charging planes based on their fuel efficiency, EU governments have several options to encourage airlines to reduce their environmental impact while still raising money to allow tax cuts for citizens and improve public services, the report for green transport group Transport & Environment (T&E) said. More than half the EU aviation market is subject to ticket taxes.
Governments have 5 options to make ticket taxes better for the environment, the report finds:
- Tax flight tickets based on the carbon content of the fuels used by that airline;
- Tax flights to destinations outside Europe according to tax bands based on the distance – thus avoiding the current restrictions on fuel taxes;
- Differentiate the ticket tax based on the aircraft’s NOx emissions during landing and take-off – addressing the climate warming effect of NOx emissions at altitude;
- Replace part of the ticket tax with a charge based on the NOx emissions of the aircraft over the distance flown and during landing and take-off;
- Instead of a ticket tax, a per-flight tax paid by the airline (and based on the aircraft’s certified weight and the distance flown) would incentivise the airline to deploy more fuel-efficient aircraft and operate fuller planes.
Bill Hemmings, aviation director at T&E, said: “Ticket taxes first came about as a way for governments to raise some revenue from an otherwise untaxed sector. But they can much better serve the public interest by incentivising airlines to pollute less. Countries which already have ticket taxes, and those like the Netherlands which are considering a tax, shouldn’t just mirror the UK’s air passenger duty. Instead, they should tax flights based on their environmental impact.”
The Dutch government is currently considering a per-flight tax based on the aircraft’s certified weight and noise levels. While the UK government claimed (in 2011) that such a measure could contravene international law, its reservations remain speculative, the report argues.
The options of basing ticket and per-flight taxes on the distance flown are legal for flights to destinations outside the EU, the report finds. Countries would need to apply a single tax rate for all flights within the EU in order to comply with single-market rules. However, to avoid court challenges about double taxation, it is legally permissible to exempt transfer and transit passengers, the report finds. This is a significant point in the debate about ticket taxes versus per-flight taxes in the Netherlands where around 70% of KLM’s passengers catch connecting flights at Schiphol
Bill Hemmings concluded: “Greener ticket and per-flight taxes are an obvious step and within national governments’ power to implement. While much, much more will be needed to put aviation on a path to near-zero emissions, this is something that can be done now and coordinated across the EU.”
