COMMENT: Why protests against EU carbon tax on airlines are a load of hot air

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

COMMENT: Why protests against EU carbon tax on airlines are a load of hot air

airplane.jpg

Seven of Europe's biggest aviation companies have joined forces to protest against the European Union's plans to tax airline carbon emissions. Read why this is a waste of time.

Since airlines were brought into the EU Emissions Trading Scheme (ETS) in January, long-haul countries have been stepping up the noise of protests which will only hurt the environment and taxpayers.

India, China, Russia, and the US met in Moscow last month to whether to retaliate against the EU's decision to place a carbon tax on all airlines entering or leaving the EU.

Rumoured options on the table include restricting or charging over-flights by European carriers, but this would only hurt airlines already subjected to the tax, which would seem spitefully anti-competitive – a case of political wrangling that hits no one but the taxpayer.

The EU’s move, by contrast, is not only fair on an environmental level – why should the most polluting mode of transport be exempt from carbon taxes? – but fair on a competition level. All airlines, after all, will be subject to the same scheme.

A lot of the debate has centred on the legality of the EU’s decision, with American and Canadian airlines arguing that aviation cannot be brought into the ETS on the grounds that it contravenes the Chicago Convention on civil aviation, the Kyoto Protocol on climate change, and the Open Skies Agreement liberalising rules on international aviation because it imposes tax on fuel consumption and because it applies to airlines flying outside the EU. The European Court of Justice (ECJ) dismissed these arguments, however, allowing the move to go ahead.

The legal argument lost, more than 30 countries are planning to look at other means of scuppering the EU’s tax, but all this smacks of protectionism over the one taxation issue for which international cooperation is vital.

The EU, as a bloc of 27 countries, is the ideal vehicle to coordinate tax policy to tackle environmental problems like climate change that do not respect national boundaries. If the world is to meet its emissions targets, unilateral action, whether through regulation or tax, will not be enough.

India, China, Russia and the US could learn a valuable lesson from the EU if they stopped letting off hot air over the ETS and started working together on common tax policies to reduce hot air in the atmosphere. Only then will everyone, taxpayers and governments alike, get the fairest deal possible.

FURTHER READING

Chinese airlines strike back against EU tax

India wades into EU airline tax debate



more across site & shared bottom lb ros

More from across our site

The threat of 50% tariffs on Brazilian goods coincides with new Brazilian legal powers to adopt retaliatory economic measures, local experts tell ITR
The country’s chancellor appears to have backtracked from previous pillar two scepticism; in other news, Donald Trump threatened Russia with 100% tariffs
In its latest G20 update, the OECD also revealed tense discussions with the US where the ‘significant threat’ of Section 899 was highlighted
The tax agency has increased compliance yield from wealthy individuals but cannot identify how much tax is paid by UK billionaires, the committee also claimed
Saffery cautioned that documentation requirements in new government proposals must be limited if medium-sized companies are not exempted from TP
The global minimum tax deal is not viable without US participation, Friedrich Merz has argued
Section 899 of the ‘one big beautiful’ bill would have spelled disaster for many international investors into the US, but following its shelving, attention turns to the fate of the OECD’s pillars
DLA Piper’s co-head of tax for the US and Latin America tells ITR about her fervent belief in equal access to the law, loving yoga, and paternal inspirations
Tax expert Craig Hillier agrees with the comparison of pillar two to using a sledgehammer to crack a nut
The amount is reported to be up 57% from the £5.6bn that the UK tax agency believes was underpaid in the previous year
Gift this article