Netherlands Ticket Tax Faces Court Challenge From Airline Association

by Ulrika Lomas, Tax-News.com, Brussels

29 January 2008

The Board of Airline Representatives in the Netherlands is reportedly taking the Dutch government to court in an attempt to overturn an unpopular proposal for an environmental levy on airline tickets.

An Air France-KLM spokesperson told Dutch daily NRC Handelsblad that legal proceedings are expected to begin on March 5, and that the case may be supported by the Schiphol Group, which operates Amsterdam's Schiphol Airport.

The Dutch ticket tax, announced last year, is scheduled to come into force on 1st July, 2008. It will add EUR11.25 to the cost of short-haul journeys of less than 2,500km, and EUR45 to the cost of tickets for long-haul flights.

The move has been condemned by the airline industry, and the International Air Transport Association (IATA) believes that the passenger tax breaches resolutions of the International Civil Organisation (ICAO), and Article 15 of the Chicago Convention on International Civil Aviation.

“This passenger tax is ineffective, inappropriate and it breaches international obligations," Giovanni Bisignani, IATA Director General and CEO stated last year in response to the Dutch government's announcement, continuing: "It is a thinly disguised tax grab that does nothing for the environment. If anything, it is counter productive as it limits airlines’ ability to buy newer, more fuel-efficient aircraft."

IATA has urged governments to look at tax credits as an incentive to improve environmental performance rather than counterproductive taxes.

“We are seeing a worrying trend across Europe with governments cynically taxing air passengers for environmental reasons then failing to use the revenues for environmental purposes. These taxes are blunt instruments that just damage tourism and impact the competitiveness of European businesses," Bisignani argued.

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