EC Opposes Air Travel Tax

by Ulrika Lomas, for LawAndTax-News.com, Brussels

03 June 2005

The European Commission has defied the wishes of some EU member states by refusing an ECOFIN request to propose a voluntary airline tax in order to fund additional development aid for Africa.

Last month, European Union finance ministers agreed to the voluntary levy on airline tickets to raise funds to assist development in the third world - although only a few member states actually stated their intention to go ahead and levy the tax.

"This will be a voluntary contribution which some member states propose to turn into a mandatory contribution, but we are leaving this open", commented Luxembourg's Jean-Claude Juncker, who heads the finance ministers group, at the time.

It was estimated by the EU that a tax of EUR10 on flights within the community and a EUR30 tax on long-haul flights would generate some EUR6 billion per year in revenues. The proposal formed a part of the EU's general anti-poverty pledges under the Millennium Development Goals, aimed at halving worldwide poverty by 2015.

However, the proposed levy was less than popular among ministers from member states whose economies rely heavily on tourism, such as Malta and Greece. Italy, Finland, Sweden and Ireland also expressed opposition to the ticket tax.

Speaking to Reuters on Wednesday, an unnamed EC source revealed that the Commission had sounded the death knell for the plan, explaining that:

"The Commissioners decided today they did not want to send the proposal. At least 10 Commissioners disagree with the whole idea of a voluntary airline tax."

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