T&E found the EU sat on data showing benefits of ending airlines’ tax break on jet fuel
A leaked report for the European Commission shows that taxing aviation kerosene sold in Europe, by duty on all departing flights to all destinations of €0.33/litre, would cut aviation emissions by 11% (16.4 MtCO2). It would have no net impact on jobs or the economy as a whole while raising almost €27 billion in revenues every year. Unlike road transport, airlines in Europe have never paid any excise duty on the fuel they take on at EU airports. Airlines are not even taxed on domestic flights where taxation barriers were lifted in 2003. In contrast, jet fuel taken on for domestic aviation has been taxed for many years in countries such as the US, Australia, Japan, Canada and even Saudi Arabia. European member states have, since 2003, had the power to start taxing kerosene uplifted for flights within Europe by using bilateral agreements., but have failed to do so. Over 20 EU states don’t tax international aviation at all (at least the UK has APD). Aviation CO2 emissions grew 4.9% within Europe last year – while emissions from all other industries in the ETS fell 3.9%. CO2 from flying in Europe has soared 26.3% in the last five years – far outstripping any other EU emissions source. With realisation about the reality of climate breakdown, this increase cannot be allowed to continue.
EU sat on data showing benefits of ending airlines’ tax break – leak
13 May 2019, Brussels (from Transport & Environment)
Taxing aviation kerosene sold in Europe [by duty on all departing flights to all destinations of €0.33/litre] would cut aviation emissions by 11% (16.4 million tonnes of CO2) and have no net impact on jobs or the economy as a whole while raising almost €27 billion in revenues every year, a leaked report for the European Commission shows.
The reduction in carbon emissions, which cause climate breakdown, would be equivalent to removing almost almost 8 million cars from our roads. European campaign group Transport & Environment said the study, finalised last year but yet to be made public, debunks the industry’s myth that the economy would be irreparably damaged if airlines were required to pay excise duty on the fuel they burn.
Unlike road transport, particularly truckers and motorists, local and foreign airlines in Europe have never paid a single cent of excise duty on the fuel they take on at EU airports. Airlines are not even taxed on domestic flights where, the report shows, taxation barriers were lifted in 2003.
In contrast, jet fuel taken on for domestic aviation has been taxed for many years in countries such as the US, Australia, Japan, Canada and even Saudi Arabia.
Bill Hemmings, aviation director of Transport & Environment, said: “Aviation’s decades-long kerosene tax holiday needs to end now. This is essential to fight climate change and will help the millions afflicted by unbearable aircraft noise. Europe’s unique and deplorable status as a kerosene tax haven is indefensible.”
Contrary to the aviation industry’s claims, the leaked study notes that the Chicago Convention of 1944  “does not explicitly prohibit the taxation of jet fuel”, only the taxation of fuel remaining on board an aircraft upon arrival from another state. T&E says that member states have long had the power to start taxing kerosene, but have failed to do so.
The European aviation sector is heavily undertaxed compared to other regions. Over 20 EU states don’t tax international aviation at all.
Whereas in aviation markets in North America, the Middle East and Asia, domestic kerosene is taxed or VAT/sales taxes or ticket taxes apply. Member states have had the option since 2003 to tax kerosene uplifted for flights within Europe by using bilateral agreements. EU finance ministers meet in The Hague 20-21 June for an unprecedented two-day summit on aviation taxation
Bill Hemmings said: “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.”
Transport is Europe’s biggest climate problem, representing 27% of the bloc’s greenhouse gas emissions.
Aviation CO2 emissions grew 4.9% within Europe last year – while emissions from all other industries in the ETS fell 3.9%. CO2 from flying in Europe has soared 26.3% in the last five years – far outstripping any other EU emissions source.
Notes to editors:
 Imposing an excise duty on all departing flights to all destinations of €0.33/litre, the minimum rate in the 2003 Energy Taxation Directive on all fuel uplifted at European airports to all destinations.
 Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Greece, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia and Spain.
 The Chicago Convention (1944) established the UN’s aviation agency, ICAO.
- Study: Taxes in the field of aviation and their impact PDF, 7.9 MByte
- Briefing: Leaked study show aviation in Europe undertaxed PDF, 265.0 KByte
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Experts say legal obstacles no barrier to introducing aviation fuel tax for flights in Europe
EU countries can end the decades-long exemption on taxing aviation fuel. Legal experts say it is possible to tax kerosene on flights between EU countries. This could either be done at EU level through a series of bilateral agreements or by agreement between individual countries. Transport & Environment (T&E) has found that 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. At present (and for decades past) 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. They also pay no VAT. Despite the aviation industry’s attempts to hide behind the 1944 Chicago Convention, when the agreement was made on not taxing aviation fuel, that is not what is 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. It remains too hard to tax fuel for international, non-EU, flights.
European elections: Top candidates for EU President demand tax on (aviation) kerosene, to help deal with CO2 emissions
Both the conservative Manfred Weber [German politician] and the social democrat Frans Timmermans [Dutch politician and diplomat] want to tax aircraft fuel. They are the main candidates to be the next EU Commission President, after Jean-Claude Junker steps down later in May. But they are divided on the CO2 tax. Both want to abolish the tax benefits for aviation fuel. Airlines currently do not pay fuel tax on their fuel, due to historic international agreements. The injustice leads to lying being significantly cheaper than other means of transport. “The preference of the airline business must be ended.” Then the train would also have better chances in the competition. Frans Timmermans wants to tax kerosene “unconditionally and quickly”… “If it fails at the international level, we have to introduce the tax EU-wide.” They disagree on whether carbon should be taxed, due to difficulties in protecting the poor. The German Union parties have so far no uniform position on the CO2 tax. But Timmermans wants a European tax on CO2, and said the next President must make climate protection a top priority and push the transformation of the economy in the next 5 years.