The minimum EU tax rate would not apply to cargo-only flights or to "pleasure flights" and "business aviation". That could include recreational use of an aircraft or a company using a plane, not for public hire, to conduct its business.
Member states could choose to tax those flights' fuel on a national basis. The draft proposal would also introduce minimum tax rates on polluting fuels used for waterborne navigation, fishing and freight transport within the EU. Subscribe for our daily curated newsletter to receive the latest exclusive Reuters coverage delivered to your inbox.
More from Reuters. Sign up for our newsletter Subscribe for our daily curated newsletter to receive the latest exclusive Reuters coverage delivered to your inbox. This means that despite the escalating climate crisis, airlines emit damaging greenhouse gas emissions for free. For years, EU countries have allowed airlines to avoid paying tax on polluting jet fuels. Across Europe, we have seen a devastatingly high death toll, the hardships and struggles that come from repeated lockdowns, as well as the financial impact.
But with the vaccine roll-out, there is light at the end of the tunnel. As Europe slowly starts to open up again and travel resumes across the continent, we need to ensure that the European recovery is sustainable and fair. Understandably, people are anxious to return to some form of normality. However, that normality cannot continue to include parts of our economy which are harmful to both people and the planet. One such area is aviation, where, for too long, the industry has been allowed to pollute largely for free.
Under current EU legislation on energy taxation, member states can and do exempt airlines from paying tax on the fuel they burn for international flights. The European Commission has stated it will review the unfair tax exemption for aviation fuels as part of its revision to the Energy Taxation Directive proposal, but has not committed to ending it. The Dutch government carried out a study on the impact a tax on fuel would have on the Dutch economy and the environment. It concluded that in the short-term, there would be an impact on air traffic but in the mid to long-term, it would have no significant impact.
So, this tax has nothing to do with benefitting the environment. It is certainly not welcome in a highly competitive and cost-driven sector that is currently on its knees due to COVID For politicians it's an easy box to tick to please their constituents, but for the aviation sector it doesn't help anyone — not our environment, nor our passengers.
The International Air Transport Association has forecast that it will take until before airlines can recover from the current crisis. It's simply the worst timing possible to introduce such a measure, and for all the wrong reasons. Thomas : The idea is that removing the VAT exemption would increase the cost of flying airline costs and ticket prices , which would reduce demand and therefore emissions. The question is whether this would seriously reduce emissions, however.
This methodology can certainly be questioned. In any case, airlines have no fuel-based alternative at the moment. So, the price would be higher, but we would still need long-term solutions to cut carbon, e. Depending on the VAT rate and the scale, such a tax may end up hitting passengers so severely that some may not be able to afford to fly.
This is especially damaging for travellers in Europe's periphery, or island regions who depend on air travel. But the bottom line is that a fuel tax is not going to dramatically reduce CO 2 emissions. The planes will still take off, albeit with less passengers. This would have the opposite intended effect in terms of flight efficiency. Fuel represents a third of our costs, so if the fuel price goes up, there will be victims.
More taxes is definitely not one of them. Thomas : For decades, airlines have been focused on reducing emissions through fleet modernisation. Manufacturers are constantly being pressured by airlines to develop more fuel-efficient planes and related technologies.
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