Conference on Carbon Pricing and Aviation Taxes

Conference on Carbon Pricing and Aviation Taxes

On June 20 and 21 2019, the Netherlands held a conference in the Hague on Carbon Pricing and Aviation Taxes, gathering politicians, civil servants and scientists from EU Member States as well as other countries. Swedish Minister for Finance Magdalena Andersson argued in a key note address that climate change is an issue for Finance Ministers since it means huge costs that need to be financed through taxes. She argued that there should be a possibility to introduce a carbon tax on fossil aviation fuel, but an obstacle that Ministers for Finance all over the world face is the Convention on International Civil Aviation (ICAO) and the policies of the ICAO connected to this convention.

Here are a few high-level takeaways:

1) Dutch Secretary of State Menno Snel said that it is necessary to have an European aviation tax and a carbon pricing system. He also stated that it is legally possible to start taxing aviation fuel internationally and that countries should work together to do so.

2) French Secretary of State Brune Poirson spoke about how aviation fuel needs to be taxed not only for environmental reasons, but also for fairness and acceptance reasons. She added that France would be open to participate in a coalition of the willing on aviation taxation, if an agreement cannot be found within the EU on a reasonable time frame.

3) EU Commissioner for Economic and Financial Affairs, Taxation, and Customs, Pierre Moscovici stated that the European Commission is – both for environmental reasons and for reason of competition between different modes of transportation  –  ready to work alongside Member States to explore all possibilities to start taxing aviation fuel by removing the exemption for aviation fuel in the EU Energy Taxation Directive and issuing relevant guidelines for bilateral taxation on intra-EU flights.

Furthermore, it was concluded that enabling the taxation of aviation fuel rests on sound economics. There was considerable support for starting to explore the possibility to tax aviation fuel internationally as aviation’s impact on the climate needs to be reduced.