COMMENT: Why protests against EU carbon tax on airlines are a load of hot air
International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX
Copyright © Legal Benchmarking Limited and its affiliated companies 2024

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 & bottom lb ros

More from across our site

The OECD had previously missed a June 30 deadline to agree an MLC on amount A; in other news, UK corporation tax bills surged to a record high last year
ITR is delighted to reveal all the shortlisted nominees for the 2024 Americas Tax Awards
Global chair Mohamed Kande and Australian CEO Kevin Burrowes are likely to be grilled on the firm’s lack of co-operation
Consensus on the amount A multilateral convention will take more than six months to achieve, one expert believes
ITR is delighted to reveal all the shortlisted nominees for the 2024 Europe Middle East & Africa Tax Awards
ITR is delighted to reveal all the shortlisted nominees for the 2024 Asia-Pacific Tax Awards
There is a 'critical need' for a unified platform to address challenges in TP, the organisation’s president told ITR
Tax specialist Kate Barton helped to transform EY’s global tax practice, Dentons has claimed
Alex Gerko had challenged HMRC’s positions on deferred trading profits that he and other traders made while working for hedge fund GSA
The Tax Practitioners Board had required PwC to overhaul its internal processes following the tax leaks scandal
Gift this article