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

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
Darren Graves will succeed Richard Houston, who is set to lead Deloitte EMEA; in other news, Morgan Lewis hired a three-partner tax team in New York
India also signed its first-ever bilateral APAs with France, Ireland, Indonesia and Sweden last year, the CBDT revealed
Chile’s revamped GAAR marks a shift toward structural scrutiny, pushing MNEs to strengthen tax governance, economic substance and compliance strategies
New reforms represent the most seismic shift in Canadian TP legislation since its enactment and a clear inflection point for MNEs, ITR has heard
Spain did not transpose EU VAT rules for SMEs or works of art; in other news, an increased VAT threshold came into force in South Africa
While the IBS incorporates taxable events previously covered by state and municipal taxes, its governance and operational logic represent a significant departure from the legacy model
The new office on the fourth floor of 4 More London will span 14,230 square feet, with the potential to expand to the first and second floors
MNEs now face a shift from modelling to execution as the side‑by‑side deal forces tax teams to upgrade systems, harmonise data, and prevent costly pillar two mismatches
As recent surveys suggest a disconnect between AI adoption and employee engagement, the big four risk digging themselves into a strategic hole
Gift this article