German Airlines Protest Proposed Departure Tax - Business Travel News

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German Airlines Protest Proposed Departure Tax

July 19, 2010 - 12:55 PM ET

By Amon Cohen

German airlines have reacted with outrage after learning last week that the federal government has provisionally proposed a new departure tax of up to €26 per passenger. According to draft legislation reported by various news agencies, the tax would take effect starting Jan. 1, 2011. Passengers would pay €13 on flights of less than 2,550 kilometers and €26 on flights beyond that limit.

The German government has said it wishes to earn €1 billion per year in combined revenues from the departure tax and the introduction of the European Union Emissions Trading Scheme, which takes effect in 2012.

Airlines protested when German chancellor Angela Merkel announced her intention to introduce the tax last month, and are even less happy now that they know the extent of it. They claim German airlines already are taxed more heavily than carriers in other EU member states and that they will lose business to airlines flying from neighboring countries.

"We feel many people will switch to Dutch, Belgian, Swiss or Austrian airports," a spokesman for Air Berlin told EuroBTN. Both Air Berlin and Lufthansa pointed to the Netherlands, which repealed its departure tax last year after the Dutch economy allegedly lost €1 billion of business from travelers driving to bordering countries for their flights.

German airlines also pointed out that, uniquely in Europe, they are subject to full value-added tax of 19 percent on domestic flights and pay higher airport handling fees. Air Berlin said it hopes to persuade the government to drop or at least modify the proposed tax, citing disagreements over its introduction between the country's finance and transport ministries.
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