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 2026

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

New hires from rivals are reportedly being axed from the firm, following a steep decline in profits
Following Richard Houston’s switch to the newly formed Deloitte EMEA, Graves has the opportunity to bring Deloitte’s tax practice up to speed with its rivals
Firms announced tax hires and promotions across Europe and the US, while fresh figures from Ireland showed corporation tax receipts edging down in the first quarter
The country has overseen better audit procedures and demonstrated commitment to acting as a 'regional leader' on international tax matters, the OECD said
Barrister Setu Kamal and policy guru Dan Neidle have clashed over the former’s legal action against Google, described as ‘bonkers’ by Neidle
Authors from Khaitan & Co evaluate the recent CBDT notification, whereby legacy investments made by investors continue to be exempt from the applicability of GAAR
Dual-qualified corporate tax specialist Christoph Schimmer joins the firm after stints at Deloitte, Cerha Hempel and DLA Piper
Geopolitical rivalry is reshaping global tax cooperation, as the OECD’s minimum tax framework fragments and the EU grapples with the ensuing legal fallout
LED Taxand’s partner tells ITR about entrepreneurial inspirations, the importance of people skills, and what makes tax cool
Shiny new offices like Ryan’s in London Bridge aren’t just a cost – they signal that a firm is willing to align with its clients’ interests
Gift this article