European Parliament Urges End Of VAT Immunity For Jet Fuel - 2006-07-06

Pressure to introduce environmental taxation on aviation in Europe has grown after a vote by the European Parliament on Tuesday. The parliament voted by 439 votes to 74 not only to end the immunity of aviation fuel from value-added tax, but also for the immediate introduction of a kerosene tax.

However, the European Parliament has no powers to legislate on this matter and its vote is non-binding. To be binding, legislation would have to be prepared by the European Commission and voted on by the transport ministers of member states of the European Union.

The parliament said it wished Europe to introduce the tax changes "to address the impact of aviation on the climate, as well as applying the 'polluter pays' principle." Its proposal would apply to all air services within the European Union other than routes on which there is competition from non-E.U. carriers.

Parliament also called for aviation to be included in the fledgling emissions trading scheme introduced by the European Commission for other industries such as power. In addition, it suggested setting up a pilot emissions trading scheme for aviation only.

Most European states and airlines formally have acknowledged a link between carbon-dioxide emissions and global warming. However, the extent of the contribution made by aviation remains disputed. Although currently accounting for only 3 percent of the European Union's CO² emissions, critics said this figure is growing quickly.