Environmental association wants an end to tax exemptions on aviation fuel

in Business · 21-02-2019 10:42:00 · 0 Comments
Environmental association wants an end to tax exemptions on aviation fuel

National environmental association ZERO has called for an end to tax exemptions on air fuel to avoid increasing distortions and emissions, citing a study by the European Federation of Transport and Environment that presents legal arguments for the application of VAT.

According to ZERO, the European Federation of Transport and Environment, of which the association is a member, has released a study that provides solutions for governments to end the exemptions, and considers them to be “of concern” throughout Europe.

In a statement, ZERO explains that, in most European Union (EU) Member States, the air transport sector benefits from tax exemptions on excise duty (VAT) on fuel consumed on flights performed within or from the EU, which is not the case with fuel used for rail and road transport.

In Portugal, where air traffic and associated emissions are growing, it adds, besides the VAT exemption, the kerosene used in aviation is also tax-exempt from the Tax on Petroleum Products (ISP).

ZERO considers it unacceptable “for the Portuguese State to continue to maintain tax exemptions for aviation fuel, which not only represent a tax loss, but also allow the internalisation of environmental costs, while benefiting one of the most carbon emission-intensive modes of transport, and penalising consumers, particularly those who do not use this mode of transport”.

“At a time when the EU and its Member States, notably Portugal, are setting a course to decarbonise their economy, and the transport sector in particular by 2050, this exemption is inadmissible,” the association argued.

The association believes EU countries should set a minimum taxation threshold on kerosene applicable to all airlines and should make efforts to remove all tax exemptions.

Member States, it stresses, have been free to force airlines to tax domestic kerosene since 2003, but so far only the Netherlands has done so.

Although aviation accounts for only about 5 percent of global greenhouse gas emissions, emissions have doubled since 1990, the association explains, considering that a kerosene tax would encourage airlines and aircraft manufacturers to reduce the impact environment, by internalising environmental costs and alleviating the burden of other taxes on citizens and improving public services.

The European Directive on energy taxation enables Member States to levy a VAT rate on aviation fuels on domestic flights without any limitation, as well as on flights between countries within the European Economic Area, provided that they are covered by bilateral agreements.


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