EU Ministers Split On Airline Ticket Tax

by Ulrika Lomas, Tax-News.com, Brussels

18 May 2005

European Union finance ministers agreed at the weekend to a voluntary tax on airline tickets to raise funds to assist development in the third world - although only a few member states actually intend 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.

It is 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 forms a part of the EU's general anti-poverty pledges under the Millennium Development Goals, aimed at halving worldwide poverty by 2015.

However, the idea has proved particularly unpopular among ministers from member states whose economies rely heavily on tourism, such as Malta and Greece. Italy, Finland, Sweden and Ireland have also expressed opposition to the ticket tax.

"There was some suggestion of a EUR10 departure tax - that would be EUR20 two ways," observed Irish Finance Minister Brian Cowen.

"If you look at some of the low-cost access to Ireland, you would be talking about significant increases in the fare," he warned.

EU finance ministers are set to re-examine the airline ticket tax issue at a meeting next month.

Recommended