An aviation fuel tax that will set limits on the amount of pollution airliners can put out has been drafted by the European Commission, according to documents released on Sunday.
Aviation. Credit: SevenStorm Photography / Pexels
The EU has drafted a proposal to cover aviation fuels under its energy tax scheme. Credit: SevenStorm Photography / Pexels
The documents, which were seen by Reuters, come as Brussels looks to an EU-wide minimum tax rate for the aviation sector in order to help it meet its climate goals.
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The proposals are expected to form part of a package set for reveal on July 14 overhauling the bloc's energy taxation systems as part of its agenda to reduce global greenhouse emissions by 55% by 2030, based on 1990 levels.
The aviation sector currently manages to evade EU tax laws. The new bill hopes to rectify this.
Bloc officials claim current taxation measures are not in line with the EU's climate goals, adding that EU tax rules promote fossil fuels over green energy sources and need rewriting to support the bloc's climate goals.
If successful, the new proposal would impose an EU-wide minimum level of tax on energy products supplied as aircraft fuel for flights within the EU.
The new tax is set to come into effect in 2023 and start at zero, increasing over a ten-year period.
There has been no confirmation as to what the final rate will be, only that it will reach its maximum amount after a decade.
The EU confirmed any sustainable fuels, including hydrogen or any renewable biofuels, will not be subject to the same taxes over this 10-year period.
The bloc hopes this will encourage airliners to seek greener fuels once demand gets back up and running coming out of the pandemic.
Current application for fuels such as e-kerosene has been slow, partly due to higher costs, the bloc confirmed. Certain fuels operate a less-than 1% market share in aviation.
This may also inspire methods to bring down costs of these fuels to prevent a massive burden of loss on the airliner, which is particularly crucial owing to the effect the coronavirus pandemic has had on travel demand and airliner profits.
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Member states are currently responsible for setting tax rates. Changes in tax at a central level will require unanimous support from the 27 member states. Should one state chose to veto the bill, implementation could be difficult.
The levies would be based on a fuel's energy content and environmental performance, meaning polluting fuels would become more expensive.
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