AECMA Opposes EU Avgas Taxation Proposal (Mar. 15)
The European aerospace manufacturing industry, represented by AECMA, considers that the recommendations in the European Commission Communication "Taxation of Aircraft Fuel" would not be the best way to address the environmental impact of aviation. The recommended actions would provide minimal reduction in emissions, while putting the European aviation industry at a competitive and economic disadvantage. An international assessment of other measures would provide greater benefits.
The Communication of the European Commission recommends that the European Council proceed with measures to allow the taxation of fuel used for domestic flights and, where possible, for trans-national flights within the European Community (intra-Community flights). The Communication also recommends intensification of EU action to introduce an aviation fuel tax at an international level.
AECMA, the European Association of Aerospace Industries, argues that any measure to reduce environmental impact should be technically feasible, economically viable and environmentally beneficial. This is the principle which guides the work of the International Civil Aviation Organisation (ICAO) in this area.
The European Commission's own study, referred to within the Communication, found that the imposition of taxation on flights within the European Community, even at the highest rate, would yield a reduction of only 0.26% of total EU CO2 emissions from transport. But at the same time this would be at some considerable economic disadvantage to the EU aviation industry, in terms of competition and operating result. Such a proposal is an inefficient way to achieve the desired result.
AECMA considers that any environmental levy on aviation should be used to reduce its environmental impact, through supporting measures such as accelerated fleet replacement or research and technology development programmes. The Communication does not say how the revenue from such taxes would be used.
Aviation is a global industry and it is essential that the development of any fiscal instruments should be done at the international level, in order to prevent the discriminatory effects described in the communication. It is therefore imperative that the European Commission takes account of the current ICAO activity in this area.
The Communication itself concludes that it would not be practicable or desirable for the Community as a whole to introduce taxation targeting exclusively intra-Community flights by Community carriers at the present time. AECMA also questions the justification for the Commission's recommendation to allow for taxation on domestic and intra-Community movements.
It is noted that fuel taxation has been subject to a very detailed Commission study. But the other economic means of addressing environmental impact, such as en-route charges, emissions trading and voluntary agreements, have not benefited from such comprehensive treatment. AECMA recommends that the European Commission subject these other instruments to the same level of analysis, so that such important policy decisions are based on a fair assessment of all possible options.
AECMA is the European Association of Aerospace Industries. Its members are the national aerospace associations of Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden, The Netherlands and the United Kingdom as well as the largest European aerospace companies.
The European aerospace industry comprises about 700 companies with a further 80,000 suppliers, many of which are SMEs. The sector employs some 420,000 people directly and about 1.2 million (1998) including indirect employees, with an annual turnover of more than Euro62 billion.
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Taxation of Aviation Fuel Would be an Inefficient Environmental Option
