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US Works To Halt EU Air Tax

by Leroy Baker, Tax-News.com, New York

26 October 2011


A bipartisan United States Congressional delegation met on October 21 with the International Civil Aviation Organization (ICAO) regarding US opposition to the emissions trading scheme (ETS) to be introduced by the European Union (EU).

Under the ETS, from January 1, 2012, in accordance with the European ETS directive, airlines operating into and out of the EU, regardless of how long that flight is in EU airspace, will be required to surrender varying emission allowances, and will be required to purchase any additional permits outside of their free allowance.

US airlines would be required to pay such an emissions tax to the EU member state to which they most frequently fly, without any requirements that those EU countries use the funds collected in emissions reduction efforts. As a result of the new provisions, experts have calculated that passengers on long-haul flights may be faced with additional costs of between EUR2 (USD2.77) and EUR12 a ticket.

The Chairman of the House of Representatives Transportation and Infrastructure Committee, John L. Mica (R - Florida) led the US delegation to their meeting with the ICAO. “If imposed on January 1,” he said, “this tax could close down direct travel from most central and western US airports to Europe, and remaining airline ticket costs would skyrocket. This ill-conceived EU aviation tax scheme is a violation of international law.”

“We are asking all nations to oppose this tax by the EU in favour of a positive outcome which can be achieved by working with ICAO and the international community,” added the Aviation Subcommittee Chairman Tom Petri (R - Wisconsin).

In addition, it was pointed out that, in September this year, the Transportation and Infrastructure Committee approved the European Union Emissions Trading Scheme Prohibition Act of 2011, which the House of Representatives is expected to consider shortly.

The proposed legislation is meant to be a strong response to the EU’s ETS, prohibiting US aircraft operators from participating in it. The bill also instructs US officials to negotiate or take any action necessary to ensure US aviation operators are not penalized by any unilaterally imposed EU scheme.

According to testimony presented to the Transportation and Infrastructure Committee in July this year, the Air Transport Association suggested that this scheme would cost US airlines more than USD3.1bn between 2012 and 2020, which could be used for more than 39,200 US airline jobs.

TAGS: environment | tax | law | aviation | environmental tax | travel and tourism | legislation | United States | European Union (EU) | Europe

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