The looming tax tussle underscores shifting environmental battle lines and a broader question for governments injecting billions into their afflicted economies: Should bailouts come before climate objectives or rather be used to advance them? The airline sector has been fighting a losing battle against tax in Europe. Governments have imposed new levies to slow growth in traffic and emissions, while the European Union plans to begin taxing jet fuel.

“This industry is going to have more taxes, not less taxes, and I think you all know it,” the head of the EU’s transport directorate, Henrik Hololei, told airline CEOs in Brussels earlier this month.“ So you can indulge yourselves with a study of what it would be like if there were no taxes – but the reality is unfortunately much harsher.”

That reality is being put to the test. Within days of the meeting, the pandemic had dramatically worsened, forcing airlines to suspend most flights, lay off thousands of staff and seek government aid to avert collapse. Besides public cash, airlines are pushing to defer or waive of a swath of European taxes and duties. 

“After the crisis we hope governments will understand that the fragility of this industry is due to low margins and heavy cost of capital,” the head of the International Air Transport Association (IATA) said. “And that it is not economically and financially wise to increase taxation on a sector that is structurally fragile and financially weak,” Alexandre de Juniac told reporters.

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