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Germany Urged To Scrap Flight Tax

by Ulrika Lomas, Tax-News.com, Brussels

17 March 2016


The International Air Transport Association (IATA) has urged the German Government to remove the "counter-productive" tax on flight tickets to boost the competitiveness of the country's aviation industry.

Opening the World Air Cargo Symposium in Berlin on March 15, Tony Tyler, IATA's Director General and CEO, said that aviation supports over one million jobs and contributes EUR77bn (USD85.5bn) to the German economy. However, he warned that these benefits are under pressure because of "onerous taxes" and capacity constraints.

Germany's flight tax was introduced in 2011 in an effort to cut carbon emissions. It is levied on both domestic and international airlines at rates of EUR7.50, EUR23.43, and EUR42.18 depending on the distance traveled, and generates about EUR1bn in revenue each year. The tax was initially EUR8 per passenger for short-haul flights up to 2,500 kilometers, EUR25 for medium-haul flights of up to 6,000 kilometers, and EUR45 for long-distance flights, but these rates were reduced from January 1, 2012.

"Adding EUR1bn to the cost of connectivity with the departure tax is counter-productive," Tyler said. "Removing it would support job creation, boost trade, and make Germany a more attractive destination for both tourism and business."

IATA believes that taxation is one of the major obstacles to growth in the global aviation sector, and frequently criticizes governments for introducing taxes that "unjustly target the industry," especially in cases where tax revenues are not reinvested in aviation infrastructure and related services. "Unwarranted or excessive taxation on international air transport has a negative impact on economic and social development," it says.

According to IATA, airlines and their customers are expected to generate USD118bn in tax revenues in 2016, equivalent to 45 percent of the industry's gross value-added.

TAGS: tax | business | aviation | Germany | trade | services

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