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Nations Pressure EU On Aviation Emissions Tax

by Mike Godfrey, Tax-News.com, Washington

06 August 2012


Officials from 17 countries, including the US, India, Russia and China, met recently in Washington to discuss alternative proposals to the European Union (EU) emission tax.

They have criticized vehemently the new EU tax applicable to all flights into and from the EU, to be assessed on airline CO2 emissions, denouncing the unilateral move at the expense of all other countries.

This meeting coincided with a proposal by US Senator John Thune (R. - South Dakota), ranking member of the Senate Commerce Committee's Aviation Operations, Safety and Security Subcommittee, to ban in the US compliance with the new EU emission tax for airlines.

Mr Thune declared that "Congress must act to protect America's sovereignty and ensure that US operators and passengers are not penalized by this illegitimate tax.".

He went on further saying: “More than USD3.1bn will be wrapped up in new taxes between 2012 and 2020 that could otherwise be invested in creating jobs and stimulating economic growth in our country.”

Secretary of State Hillary Clinton and Secretary of Transportation Ray La Hood, with strong support from the US aviation industry, have both sent letters to the EU to express their opposition to the fact that such a tax would apply to foreign airlines as well as EU airlines.

The EU emissions trading scheme has applied to aviation emissions from January 1, 2012. The scheme requires all airlines operating to and from the EU to pay extra permits for carbon emissions above a set allowance. The first bills should be sent out in April 2013, four months after the end of the first year of assessment.

The US, along with the 16 other non-EU countries opposing the scheme, favours a global approach to avoid any conflict of sovereignty and to avert a potential trade war. The United States has already announced it would reject any unilateral European carbon tax scheme on airlines kicking in before 2020, and hopes a global proposal will be discussed in September 2013 during the next meeting of the International Civil Aviation Organization.

EU officials, however, have rebuffed these critics from opposing countries, arguing they claim to favour an alternative global approach while not coming up with a real alternative plan.

TAGS: Russia | compliance | tax | India | law | aviation | China | carbon tax | United States | trade

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