Possible EU aviation fuel tax would mean radical change to existing global tax regime
Aviation fuel is generally exempt from excise duty. This may be about to change in the EU.
A European Commission report on aviation taxes and their impacts stated this year that a fuel tax applied to aviation would have a negligible impact on employment and gross domestic product in the EU, while producing a reduction in sectoral carbon emissions of 11%.
A range of taxes across the EU, including air passenger duty taxes and VAT on domestic flights, is already imposed on passengers and private pilots.
Governments incentives to put an end to the global tax exemption for aviation fuel are focused on reducing CO2 emissions. Aviation accounts for 2.5% of global carbon dioxide emissions, and emissions invariably increase with economic growth. They are expected to rise by 68% between 2010 and 2020.
The French government has recently implored the new round of upcoming European Union executives to take this more seriously and to implement an EU-wide excise duty on jet fuel specifically.
A new tax regime could mean that commercial operators bear the brunt, slowing growth in aviation generally; or it may entail airlines passing costs down onto passengers or the customers of cargo companies, which again could slow growth by reducing global traffic volumes. What the proposals mean for our customers is at this stage is uncertain. We will be tracking reforms as they emerge and will keep you regularly updated.