EC PROPOSES TAX ON AVIATION FUEL

EC PROPOSES TAX ON AVIATION FUEL    The European Commission is recommending that European Union member states implement a tax on fuel consumed by planes flying to, within and between EU states.
   The EC put forward two tax options in a communication to members this week:
   * A tax on intra-EU flights operated by European carriers.
   * A tax on all flights to and from the EU operated by all carriers.
   The Association of European Airlines, representing most of Europe’s major carriers, has voiced concern over the proposal, which the AEA called “confused and confusing.”
   “Let us be clear that this is an attempt at political manipulation of our industry growth rate through tax-induced price rises,” said Karl-Heinz Neumeister, the AEA’s secretary general. “The (EC) communication takes as its basis a study that demonstrated, in every tax scenario it considered, a high cost — both in money and jobs — which was out of all proportion to the microscopically small environmental benefits.”
   The EC proposal rejected an intra-EU application of a fuel tax because it would produce little environmental benefit and hurt the competitiveness of EU carriers, the AEA said.
   The EC called for a broader application of a charge to all flights, which would require the renegotiation of every international air agreement signed by EU states. Recognizing the difficulty of that prospect, the EC recommended that EU members intensify their efforts within the International Civil Aviation Organization.
   The EC proposed as a first step that EU states apply a tax on domestic flights and renegotiate bilateral agreements to accommodate a tax on intra-EU flights.
   The ICAO has stated that it opposes the implementation of any taxes on jet fuel until more can be learned from studies underway within ICAO’s environment committee.
   The controversy over fuel taxes comes as the EU is preparing to defend itself in ICAO over environmental policies it has drawn up on aircraft noise. The EU is planning to implement on May 4 a law banning older planes fitted with noise-muffling “hushkits” from flying in the EU within two years.
   The U.S. government has filed a formal complaint at ICAO calling the ban discriminatory and in violation of international aviation rules. The United States and the EU must now present evidence to defend their arguments before ICAO will issue a ruling.