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German Row Escalates Over Plane Ticket Tax

by Ulrika Lomas, Tax-News.com, Brussels

06 July 2012


Germany’s coalition government remains deeply divided on the issue of whether or not to abolish the country’s controversial plane ticket tax, which entered into force in 2011.

While German Transport Minister Peter Ramsauer supports the German airline companies and has called for an immediate end to the tax, German Finance Minister Wolfgang Schäuble has insisted that he has no plans to abolish the levy, which serves to generate in the region of EUR1bn (USD1.25bn) annually for the state.

Introduced in Germany at the beginning of 2011, the tax is currently levied at a rate of EUR7.50, EUR23.43, and EUR42.18 on flights departing from German airports. The tax was initially imposed at a rate of EUR8, EUR25, or EUR45 per passenger, depending on the destination.

Germany’s aviation industry fiercely criticized the levy from the outset, arguing that the tax costs airline companies around EUR500m a year.

Klaus-Peter Siegloch, President of the German Aviation Federation BDL, warned recently in Berlin that the plane ticket tax is much too expensive and is driving airline companies into the red. The country’s four largest airline companies last year paid 60% of the EUR1bn levy, Siegloch explained.

According to Siegloch, the government’s decision to proceed unilaterally and to impose the tax at national level has served to distort competition and to severely disadvantage domestic airline companies and airports.

Passengers are electing to fly from airports in neighbouring countries, such as Zurich, Strasbourg, and Amsterdam, and are even changing their booking patterns to avoid the levy, for example by purchasing two tickets instead of one long-haul ticket, BDL argues, insisting that without the tax, passenger numbers would be up by around five million.

Refuting these claims, the German finance ministry underscores that its plane ticket tax has not served to adversely affect airline companies, and that the actual number of air passengers in Germany rose 5% last year compared to 2010, to 198.2 million.

Defending its commitment to protecting the environment, the ministry also points out that the tax has served to reduce carbon dioxide emissions by 210,000 tonnes, corresponding to 0.6% of total emissions from German aircraft.

TAGS: environment | tax | air passenger duty (APD) | aviation | Germany

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