EU may put new tax on air travel

Just a few days before the introduction of an additional Lm10 tax on airline tickets, Maltese air passengers may be in for more bad news if new EU proposals to be tabled next autumn are approved by member states.

Commission sources told The Times that the European Commission has approved draft new environment rules under which European airline companies would be included in the emissions trading scheme and thus start paying for polluting the environment.

According to the European airline industry, this move would trigger another increase in airline costs of about €9 (Lm3.90) per return flight which would be passed on to consumers.

This is the second attempt by the Commission to impose a tax on the airline industry. A few months ago, supported by some member states, it had proposed the introduction of a kerosene tax aimed at funding EU development aid to poor countries.

Malta had strongly opposed this proposal with Prime Minister Lawrence Gonzi declaring at an Ecofin council that the island will not introduce this tax as it threatens the tourism industry.

Although the new proposal is up for discussion, Commission sources said the measure is unlikely to see the light of day. What will probably happen is that the new tax will be introduced only by individual member states on a voluntary basis.

At the beginning of this year, as part of its strategy to reach the climate change targets under the Kyoto protocol, the EU introduced an emissions trading scheme through which large industry polluters in the EU are obliged to reduce carbon dioxide emissions or else pay up for additional pollution. Companies are issued with free permits for each tonne of carbon dioxide they may produce. Cleaner companies that do not use their allowance can sell their permits on the market to those companies lagging behind.

Malta is taking part in this scheme and has presented its national plan to the Commission. In Malta, only the two power stations are considered as heavy polluters and qualify under the scheme.

Now the Commission wants to include airlines putting them in the same category as power generators and oil refineries. The proposal already has the backing of the British European Union presidency and is accepted by some leading airlines.

The draft proposals approved by the College of Commissioners last week say that all emissions from any flight departing from the EU should be included in an emissions trading scheme. The inclusion of non-EU airlines would help protect the competitiveness of European airlines.

The Association of European Airlines, which also represents Air Malta, said it was evaluating the scheme but that it was already using better technology to reduce emissions.

According to the EU, airlines contribute about three per cent of EU emissions although this share is expected to grow as air travel increases.