EC To Propose EU Tax On Air Travel - Business Travel News

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EC To Propose EU Tax On Air Travel

August 10, 2010 - 11:55 AM ET

By Amon Cohen

The European Commission next month is set to propose a European Union-wide tax on air travel, a senior official was quoted as saying on Monday. EU budget commissioner Janusz Lewandowski told Financial Times Deutschland he is looking at "an aviation scheme" among a small range of options that could raise revenue directly for the European Union for the first time.

"There are various options that would not affect the finance ministries and have a link to European policy like a financial transaction tax, CO2-emission auctions and an aviation scheme," said Lewandowski. Later in the interview, he said, "Another possibility could be to tax what is directly connected to the single markets, to the open sky, open travel. So an aviation duty could be something to be charged on a European level."

At present, the EU does not raise any of its annual revenue of €140 billion through direct taxation. Instead, most of the money comes from contributions from members states in proportion to their GDP, and a further contribution is made from value-added tax revenues. The European Commission wants to increase the EU budget by 5.9 percent next year and believes direct taxation would provide the extra funds as well as reduce the need for contributions from member states.

A small number of EU states, including the United Kingdom, already impose departure taxes that enter their own coffers, and Germany will do the same starting in January 2011. Airlines are vehemently opposed to direct taxation, claiming that it deters flying.

The U.K. and German governments issued criticisms of Lewandowski's comments yesterday, saying taxation is a matter for member states to determine at a national level.

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