State losing hundreds of millions of euros by waiving aviation taxes

in News · 17-05-2019 01:00:00 · 0 Comments
State losing hundreds of millions of euros by waiving aviation taxes

A study by the European Commission has revealed that tax exemptions in the aviation sector are hindering not only the environment, but also Portugal’s coffers.

The study found that the Portuguese government could be generating almost 500 million euros a year if it enforced a fuel tax on airlines. In Portugal, fuel and airline tickets are not subject to any form of tax, neither on petroleum products nor in the form of VAT.


The levying of aviation taxes is foreseen in a 2003 European directive on the taxation of energy products, but its application is optional.
Still, a European Commission (EC) study reveals that if the Portuguese government were to force airlines to pay the minimum rate of 33 cents per litre of fuel as defined in the directive, it could raise almost 500 million euros in taxes per year.


The document, seen by Lisbon-based radio station TSF, also reveals that taxation could contribute towards lowering aviation emissions by 11 percent and noise values by six percent.


Reacting to the EC’s findings, national environmental association ZERO has this week criticised the tax exemptions of the aviation sector in Portugal.


In comments to TSF, Francisco Ferreira, president of ZERO, said that the benefits of enforcing taxes are not limited to raising funds and lowering emissions, but could also stimulate employment and overall wealth, as well as reducing noise, air pollution, greenhouse gas emissions and associated costs to the state not accounted for in the study.


In a statement, the environmental association recalls that “since aviation is one of the modes of transport with the greatest climatic impact, it is urgent that the Portuguese Government put an end to the tax exemptions on air fuel, which would be fundamental for airlines to internalise the costs of climate change and reduce the noise that affects thousands of people in the vicinity of airports”.


The European Commission study also reveals that aviation’s greenhouse gas emissions increased by seven percent in Portugal last year, two percent more than in the rest of Europe.


EU finance ministers are due to meet in the Netherlands next month to discuss aviation taxation.



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