French economist suggests high tax on premium air travel, to raise climate adaptation finance
How to tax the people who emit the most carbon is a tricky matter. A French economist, Thomas Piketty, has suggested a high tax on premium air travel. He says: “A €180 levy on business class tickets and €20 on economy class would raise the estimated €150 billion a year needed for climate adaptation.” It could be a proxy for privilege. It “might be easier to implement but less well targeted at top emitters” than other options. That is one proposal to address global inequalities between high-polluting individuals and the victims of climate change. A tax on air tickets to finance development programs already exists in some countries. Piketty suggests we need to increase its level and generalise it. Across the world, about 10% of people are responsible for 45% of global CO2 emissions, and increasingly some of the high emitters are a privileged elite in emerging economies. The rich in these countries now emit more carbon than working class Europeans. Meanwhile, there is a persistent shortage of finance for climate adaptation, and the OECD said just 16% of climate finance in 2013/14 went to adaptation. In the UK, a “frequent flyer” levy has been proposed, so anyone’s first flight is tax free, but the tax shoots up with each successive flight. The reduced demand for air travel would make an additional runway unnecessary.
Thomas Piketty proposes flight tax to raise climate funds
French economists moot €180 levy on business class tickets to help vulnerable countries adapt to the impacts of climate change
By Megan Darby (for Climate Home, part of the Guardian Environment Network)
Taxing business flights is one way to target high emitting lifestyles of the global rich.
Air travel should be taxed to protect the world’s vulnerable from drought, flooding and sea level rise.
A €180 ($196/£130) levy on business class tickets and €20 on economy class would raise the estimated €150bn a year needed for climate adaptation.
That is one proposal by French economists Lucas Chancel and Thomas Piketty to address global inequalities between high-polluting individuals and the victims of climate change.
“Taxing flights is one way to target high emitting lifestyles, especially if we tax business class more than economy class,” Chancel told Climate Home.
“A tax on air tickets to finance development programs already exists in some countries. What we need is to increase its level and generalise it.”
Piketty – author of Capital, a bestseller on wealth inequality – and Chancel outline huge disparities in people’s carbon footprints across the world.
One-tenth of people are responsible for 45% of global emissions.
“Economic inequalities are reaching record high levels and reducing them constitutes a key challenge to policy-makers in the coming decades,” said Chancel.
“It’s the same thing with carbon: another huge challenge that puts our societies at risk. If we fail to address both, our societies can collapse.”
Increasingly, they say, inequalities within national borders are more important than those between countries.
The richest 1% in America, Luxemburg and Saudi Arabia emit 200+ tonnes of CO2 equivalent a year, more than 25 times the global average. The poorest in Mozambique, Rwanda and Malawi are responsible for around 0.1t CO2e.
But in between, a privileged elite in emerging economies is starting to outstrip working class Europeans.
Even in Tanzania, classed as one of the world’s least developed countries, the richest 1% emit as much as the global average – and the same as the second poorest decile in France.
Meanwhile, there is a persistent shortage of finance for measures such as drought-resistant seeds and flood defences to shield those endangered by carbon profligacy.
Just 16% of climate finance in 2013/14 went to adaptation, the Organisation for Economic Cooperation and Development estimates, with the rest going to low carbon projects.
The report suggests ways to close the gap, arguing it shouldn’t continue to rest on EU funds, given the growing emissions of China’s upper class.
In one scenario, all above-average emitters are taxed on carbon above that average threshold. That implies North Americans contribute 36%, Europeans 20% and Chinese people 15%.
In another, only the 1% pay. That skews the distribution way over to North America, which coughs up 57% of the total.
An airline levy is mooted as a proxy for privilege. It “might be easier to implement but less well targeted at top emitters” than other options, the report says.
Forget airport expansion, we need a Frequent Flyer Levy
By Steven Devlin (New Economics Foundation. NEF)
Photo credit: Benson Kua
Aviation emissions are a rapidly increasing environmental problem predominantly caused by a small and wealthy travelling elite. Yet flying receives exceptionally favourable treatment in our tax system.
As the Government prepares to announce its position on expanding airport capacity in the coming weeks, we put the spotlight on proposals for a new Frequent Flyer Levy.
A Frequent Flyer Levy would punish excessive flying, limit the environmental impact in a progressive way and eliminate the need for new runways.
By 2050 it is expected that a quarter of all UK carbon emissions will be due to aviation.
This is because the UK has the highest level of flights taken per person of any country, [probably a little more even than the USA] and because, unlike most other sectors, the aviation industry is not expected to reduce its environmental impact in absolute terms over the long run.
The Department for Transport forecasts that demand for flights from UK airports will more than double between 2010 and 2050. The driver for this demand increase is predominantly short-haul leisure travel, rather than business travel or long-haul flights.
Demand for flights is distributed highly unequally among individuals. It is estimated that 70% of all flights in 2013 were taken by just 15% of the population, while 57% of the population took no flights abroad whatsoever, in that year.
Those who take flights are also significantly better off compared to the general population. For example, the mean income for leisure passengers at Edinburgh Airport in 2013 was £56,288, more than twice the average Scottish income for that year.
The continued expansion of air travel, therefore, is a very substantial environmental threat driven by a small, wealthy elite, the consequences of which will be borne primarily by the global poor.
Air travel currently benefits from a highly favourable taxation regime in the UK, with exemptions from VAT and fuel duty. The current system of Air Passenger Duty (APD) amounts to a small average charge on each flight. [APD is £13 per return short haul flight to anywhere in Europe.It is £26 for a return domestic flight. And it is £71 for any other return flight].
NEF research has shown that reforming this taxation scheme to create a new Frequent Flyer Levy, which has no charge for the first flight each year and an increasing tax rate for each successive flight, could limit the environmental impact in line with official targets, while redistributing the opportunity to fly down the income spectrum.
The Government is expected to announce a decision soon on whether or not to expand Heathrow, following the Davies Commission recommendation to do so.
Expansion at either Heathrow or Gatwick is incompatible with our climate targets under the Climate Change Act, and is likely to result in increased air and noise pollution for the local area. Modelling of the Frequent Flyer Levy proposal finds that this policy could obviate the need for any new runway capacity.
The FFL would be efficient (raising large amounts of revenue with relatively little economic distortion) and progressive (being borne primarily by richer households).
Leading French economist and LSE Professor Thomas Picketty also recently advocated an increasing aviation tax as a progressive tool for combatting climate change.
Weekly Economics Podcast from NEF (New Economics Foundation)
In this week’s podcast Leo Murray from the campaign ‘A Free Ride’ discusses airport expansion, its links to the UK economy and how a Frequent Flyer Levy could work.
NEF blog: A fairer way to fly (http://www.neweconomics.org/blog/entry/a-fairer-way-to-fly)