Types ofaviationtaxation andsubsidies, and implementations, are listed below. Taxation is one of several methods tomitigate the environmental impact of aviation.
According to the Amsterdam-based international environmental organisationFriends of the Earth (2005), aviation does not pay tax on fuel and aviation's expansion is fuelled by its exemption from taxes. In the UK, aviation got £9 billion tax free benefits in 2003. Friends of the Earth argued that fuel tax would give incentive to improve the energy efficiency of operations, and would be a more effective response than emission trading.[1]Chicago Convention prevents double taxation on aviation fuel on international flights, but does not prohibts it altogether. Almost always taxes are exempt because of bilateral air agreements between countries.
This is not always the case for domestic flights. For example, in the United States, on domestic flights fuel is taxed 19.3 cents per gallon on piston aviation fuel, 21.8 cents per gallon on JetA, and 4.3 cents per gallon on commercial jet fuel. This has been a very effective funding source for air traffic control without the complications and expenses of collecting on a per-flight basis.[2]
Airlines are typically exempt from VAT, especially on international flights.
Historically, EU aviation fuel was tax free and attracted noVAT. Commercial aviation fuel taxation in the EU was banned in 2003 by theEnergy Taxation Directive (2003/96/EC), except with bilateral agreements between member states. However, as of 2018, no such agreements exist.[3]
In November 2019, the Finance Ministers of Belgium, Bulgaria, Denmark, France, Germany, Italy, Luxembourg, the Netherlands and Sweden presented a joint statement calling on theEuropean Commission, more specificallyEuropean Commissioner for Climate ActionFrans Timmermans, to introduce EU-wide taxes on aviation so as to charge the entire aviation industry more for its emissions and pollution, and put all member states on level pegging. Citing the fact that aviation causes around 2.5% of globalCO2 emissions, the Ministers proposed both uniform air passenger taxes as well as kerosene taxes (both excise duties and VAT).[4][5] In a September–October 2019 poll conducted by the European Investment Bank (EIB) amongst 28,088 EU citizens from the then 28 member states, 72% said they would support a carbon tax on flights.[6]
As part of itsFit for 55 package proposed in July 2021 by the European Commission, the European Union is planning to gradually introduce a kerosene tax (for both private and commercial flights) between 2023 and 2033 at EUR 10.75 pergigajoule (GJ), while sustainable fuel such e-kerosene will benefit from a minimum rate of zero.[7]
Austria introduced a Flight Tax Act (Flugabgabegesetz,FlugAbgG) in April 2011[8] similar to the German aviation taxation system. In 2013, the fees for short and medium-haul flights were reduced from 8 euros to 7 euros and from 20 euros to 15 euros respectively, and halved again in 2018. According to §5.1 of the Flight Tax Act, the flight tax depends on the distance to the destination airfield per passenger:[9]
During theCOVID-19 pandemic, airlines in Europe had totemporarily cease most operations and had requested a total of 12.8 billion euros in government support by mid-April 2020, according to aTransport & Environment,Greenpeace and Carbon Market Watch report. At the time, Austria was the only country which insisted (throughMinister of Climate Action, Environment, Energy, Mobility, Innovation and TechnologyLeonore Gewessler of theGreens) that a government bailout of itsflag carrier (Austrian Airlines, with about 7,000 employees[10]) should be linked to climate targets.[11] On 8 June 2020, the Austrianconservative–greencoalition government concluded a support deal for Austrian Airlines (a subsidiary ofLufthansa) for 150 million euros in taxpayer grants, and 300 million euros in banking loans that are to be paid back. This was significantly less than expected (Austrian Airlines had applied for 767 million euros), and came under the following conditions:[12][13][10]
In 2022, the Belgian government introduced an aviation tax for all airline flights of 10 euros within 500 kilometres, two euros if the destination is located more than 500 kilometres away and within theEEA and four euros outside the EEA. The reason the tax is higher for short flights is because a shift to trains is more realistic for those distances.[14]
On 9 July 2019, French transport ministerÉlisabeth Borne announced that France would introduce an eco-tax on passengers in 2020. Flights within the EU, including domestic flights, would be taxed 1.5 euros for economy class and 9 euros for business class, while flights out of the EU would be charged with 3 euros for economy class and 18 euros for business class. Different rules apply to Corsica and other overseas departments and territories of France. The exo-tax was projected to produce 180 million euros in revenue annually.[15]
On 9 June 2020, during theCOVID-19 pandemic in France, economy and finance ministerBruno Le Maire announced a financial support programme for the aerospace sector for 15 billion euros. It included the earlier announced bailout of its flag carrierAir France–KLM at 7 billion euros (comprising a state loan of 3 billion and bank loans of 4 billion), with conditions to transform it into the 'most environmentally friendly airline on the planet'. There were several aims, including the protection of 300,000 direct and indirect jobs (100,000 of which were said to be at risk within 6 months), a gradual recovery of the 34 billion annual trade surplus that the French aviation industry produced, and the goal of developing carbon-neutral air travel by 2035 rather than 2050 (for which the civil aviation research council CORAC would receive €1.5 billion in support over three years).[16]
Germany's air passenger tax is divided in three categories, with the following taxes since 1 April 2020:[17]
In 2018Germany applied 19% VAT on domestic airline tickets.
Ireland had anAir Travel Tax from 2009 until April 2014.
On 1 July 2008, theFourth Balkenende cabinet introduced an aviation tax (vliegbelasting orvliegtaks) of 11.25 euros per ticket for flights within Europe and 45 euros for destinations outside Europe.[18] Due to vehement opposition by the aviation industry and travel agencies, the tax was abolished a year later on 1 July 2009, leading to heavy criticism from academia and environmental organisations.Amsterdam Airport Schiphol claimed it lost 900,000 passengers to airports abroad due to the tax, butVrije Universiteit Amsterdam economist Eric Bartelsman pointed out that theGreat Recession reduced air travel across the world, not just in the Netherlands.Tilburg University economist Lans Bovenberg was more positive, arguing aviation taxes should be implemented simultaneously across the entire EU to be effective, and that taxingjet fuel would be a more effective measure than taxing passengers.[19]
In 2017, theThird Rutte cabinet coalition agreement planned to introduce a new aviation tax of 7 euros on every ticket, regardless of destination, on 1 January 2021.[18] Cargo aircraft will pay a tax based on their weight and noise pollution class:[18] up to 3.85 euros per tonne of cargo, with a lower rate for quieter aircraft.[15] The tax, which is projected to produce an annual revenue of 200 million euros, has four goals: reducing CO2 emissions, reducing other emissions such asparticulates, reducing noise pollution, and preventing a jet fuel tax.[18] The new plan is more likely to succeed because the tax is much lower than in 2008, and most neighbouring countries except Belgium had also introduced aviation taxes in preceding years, making passengers' tax circumvention efforts unlikely.[18] The government was aiming to eventually establish a uniform EU-wide aviation tax.[18]
Since 1 January 2021, an air passenger tax of €7.845 per person per flight applies in the Netherlands. The tax does not apply to transfer passengers, and children under the age of 2. In the Tax Plan 2023, the cabinet proposed to increase the air passenger tax by €18.48 from 2023. Parliament had yet to approve the plans.[20] 1 January 2023, the new tax rate of €26,43 went into force.[21]
Sweden introduced a passenger tax for commercial flights of more than ten passengers in April 2018.[15] As of 2020, Swedish aviation taxes for passengers were divided into three categories, depending on the destination:[22]
In November 2019, the Swedish government ofStefan Löven (Löfven I Cabinet) proposed to collect an annual aviation tax of around 78 million euros.[23] Under the proposal's conditions, the Swedish aviation industry would still be 100% exempt from the Swedish energy tax, carbon dioxide tax and sulphur tax that other companies pay.[24]
Norway introduced airline passenger fees on 1 June 2016. From 1 June 2016 to 31 March 2020, the fee was 80Norwegian kroner per passenger. On 1 April 2020, the fee was changed to 75 kroner for passengers with a final destination in Europe and 200 kroner for passengers with a final destination outside Europe. In addition, VAT was added to the tax.[25]
In June 2020, theSwiss Federal Assembly approved a proposal (passed by theCouncil of States in 2019) to introduce an environmental levy of 30 to 120 Swiss francs per airline ticket 'depending on distance and [travel] class'; nearly half of the proceeds are to flow into a climate fund for emissions-reduction initiatives.[26] The Swiss oil lobby started a campaign and a referendum against the new CO2 laws (which included the aviation tax), and in June 2021, 52% of the Swiss voters rejected them,[27][non-primary source needed] meaning there will not be aviation taxes in the very near future.[citation needed] Parliament continued to reject several parliamentary initiatives on the subject thereafter. Public support for some kind of airline ticket tax remained high, with 72% of respondents in a June 2022 GfS Zurich survey saying they were in favour: 42% of respondents backed a levy of CHF30 ($30.40) for short-haul flights and CHF120 for long-haul flights, while 50% agreed with even higher charges.[28]
In theUnited States, most states tax avgas and jet fuel.[citation needed][dubious –discuss]
Some governments[who?] subsidizeairports and passengercustoms costs withinairports.
The EU Commission in 2014 ruled that subsidies Ryanair received from a regional authority a decade ago had to be repaid (€525,000).[29]
In June 2020, Flemish Economy MinisterHilde Crevits decided that trainings for airplane and helicopter pilots would no longer be subsidised inFlanders from 1 July 2020 onwards.[30]
