German air passenger tax (now €7 – 40) under threat as negotiations continue to form new German government
Negotiators for a new grand coalition between Chancellor Angela Merkel’s conservatives and Social Democrats may drop a proposal to progressively abolish Germany’s air transport tax (the Luftverkehrssteuer.) The tax is levied on air ticket prices and costs between €7 and 40 euros depending on the distance flown, and generates about €1 billion per year. The airlines, of course, want the tax abolished, and claim it harms “competitiveness.” Aviation in Germany already pays no VAT (except on domestic flights) and no fuel duty. The CDU (Merkel) and SPD negotiating teams were discussing abolishing the ticket tax, but so far the tax seems to have survived the talks. It would be crazy to allow aviation to pay even tax than it does now, bearing in mind its massive CO2 emissions. Aviation is on its way to eating up all of what remains of our chances to limit global warming to below 2°C as agreed in Paris. Aviation emissions are growing fast (up 8% in the EU in 2016), billions of people are waiting to catch their first flight (just 3% of India’s population have ever boarded a plane). Efficiency improvements in the sector are slow and shrinking. What’s more, by ignoring non-CO2 effects we’re underestimating aviation’s contribution to global warming by a factor of at least two.
Ending aviation’s tax holiday
February 7th, 2018 (T&E – Transport and Environment)
One billion. That’s how much in euro that Germany’s tax on airline tickets generates every year. A billion is about a quarter of what trucks pay in Maut every year, or about 35 times less than the motor fuel tax.
But despite all of this the future of the Luftverkehrssteuer was hanging in the balance in recent days. Following pressure from Germany’s aviation industry – which claims the ticket tax harms its ‘competitiveness’ – the CDU and SPD negotiating teams were discussing abolishing the ticket tax. As this article goes to press it looks like it may have survived, which would be good.
But a €7 ticket tax is only a small piece of the aviation puzzle. Two weeks ago we brought together the world’s top aviation environmental experts. The picture they painted was sobering: aviation is on its way to eating up all of what remains of our chances to limit global warming to below 2°C as agreed in Paris. Aviation emissions are growing incredibly fast (up 8% in the EU in 2016), billions of people are waiting to catch their first flight (just 3% of India’s population have ever boarded a plane) and efficiency improvements in the sector are slow and shrinking. What’s more, by ignoring non-CO2 effects we’re underestimating aviation’s contribution to global warming by a factor of at least two. What’s to be done?
Perhaps it is useful to compare aviation to passenger cars. On the one hand the comparison reflects badly on aviation. We’re making real progress on light vehicles, with EVs charged with wind and solar electricity acting as the poster child of a zero emissions future. On the other hand, the fight against car pollution started decades ago. Carmakers are not inherently more innovative (although there is more competition than between the Airbus-Boeing duopoly). But over the past 30-40 years we have progressively tightened the screws on car pollution. That pressure, be it fiscal or technological, has led to innovation, often beyond our imagination. And because we have all these instruments (taxes, standards) we also have the means to make the transition go faster. Just imagine Tesla trying to enter the heavy-duty market in a world without diesel excise duties!
Taxation clearly plays a major role and here Europe has a big opportunity. The EU’s €1 trillion budget (over seven years) is up for review and the Commission is due to make a proposal for a post-2020 budget in May. Because of Brexit there’s a €12 billion hole in the budget and that at a time when there are a number of new priorities (migration and security top Juncker’s list). The two options to balance the budget – cutting spending or increasing member state contributions – are unpopular for understandable reasons. One way forward which was proposed by former Italian prime minister Mario Monti is to increase the EU’s so-called own resources. These aren’t EU taxes but rather national taxes or levies where the EU gets a cut, the prime examples being VAT and import duties.
We have run the numbers and if all EU countries would agree a fixed VAT rate of, say, 15% on air tickets, this would generate €11 billion in new revenues from intra-EU flights and €17 billion from both intra and extra-EU flights. A small kerosene tax on intra-EU flights of 10 cents a litre would generate €3 billion whereas a level equivalent to the EU’s minimum diesel taxes (33 cent/litre) would generate €9.5 billion. We also looked at motor fuel taxation where a new carbon tax equivalent to €30/tonne (roughly 7.5 cent/litre) could generate up to €26 billion in additional revenue. (These are EU-28 numbers.) Some of these revenues could be directed into helping to fill the EU’s “Brexit funding gap”.
Of course, taxation is challenging because it normally requires unanimous approval. But that’s also true for the EU budget where a deal will need to be found. So if ever there was an opportunity for a grand bargain which helps spare the member states’ and the EU’s budget while tackling our toughest climate problem, now would be the time. Of course, it wouldn’t be “easy”. But then again, nothing worthwhile ever is.
German coalition negotiators may drop proposal to abolish air transport tax: source
By Reuters Staff
BERLIN (Reuters) – Negotiators for a new grand coalition between Chancellor Angela Merkel’s conservatives and Social Democrats may drop a proposal to progressively abolish Germany’s air transport tax, a source familiar with the negotiations said on Sunday.
A working paper seen by Reuters on Friday had called for a gradual abolition of the tax, which generates over 1 billion euros for the government each year.
But on Sunday, a source said that proposal could be dropped from the final coalition agreement as negotiators continued to fine-tune the deal and make trade-offs.
The air transport tax is levied on ticket prices and costs between 7 and 40 euros ($9 and $50), depending on the distance flown.
Over half the revenues generated by the tax are paid by German airlines, including Lufthansa, Germany’s largest carrier, whose shares turned slightly positive after the initial report about a phase-out on Friday.
The BDL aviation association, which represents the interests of the airline industry, has previously called for the tax to be abolished.
German air passenger taxes
Germany has the second highest air passenger tax in Europe, but it raises less than APD in the UK – partly as the UK is an island. British travellers have fewer alternative to flying for international travel, whereas Germany shares a land border with nine other countries.As well as the UK and Germany having passenger taxes, France, Austria and Italy have much lower rates and raise significantly less revenue.
More information about which countries charge any kind of tax on air travel (there is no fuel duty on jet fuel worldwide):
Other countries that have air ticket taxes:
The table below shows a breakdown of the key charges levied by the state in four EU countries (all per departing passenger);
Air Transport Levy EUR 8.00
Civil Aviation Tax EUR 4.31
Solidarity Tax EUR 1.00
Airport Tax* EUR 12.00
National Surcharge EUR 1.25
Air Traffic Control Law EUR 8.00
Aviation Security Fee* EUR 5.24
Air Passenger Duty GBP 13.00
France leads the way in the number of different taxes it levies on passengers, with four. The Airport Tax varies by airport, though outside of the main airports in France it is usually levied at EUR 12.00 per departing passenger. Taken together, these taxes make passengers departing from France the most heavily taxed in Europe.
The state levies two passenger taxes in Germany, a departure tax and a security fee. The departure tax does vary by distance, though for this analysis only the short-haul tax is required. The Security Fee varies by airport of departure, but is usually within the range of EUR 4.00 to EUR 7.00 per departing passenger.
Spain also has an air ticket tax, and France has a Passenger Solidarity Tax http://www.airportwatch.org.uk/?p=2585
and more at
with links to various stories about national charges