Global Policy Forum

By Geoff Meade

Chancellor Gordon Brown is set to back EU calls for a tax on aircraft fuel - but only if the levy applies across the world. European Commission proposals to be discussed in Brussels on Monday would give EU governments the option to apply an energy tax on air travel for the first time. The move would reverse a current EU Directive which specifically exempts commercial aviation fuel from taxation.

A Commission study to be presented to EU finance ministers says that positive environmental benefits develop in line with tax levels. But it also added that applying such an aircraft fuel tax only to EU carriers "would result in a decrease in their revenues and in a large adverse impact on operating results, putting them at an unjustified disadvantage internationally". A Commission spokesman said: "This proposal would not oblige countries to tax aviation fuel, but it would allow them to do so if they wanted to." Aviation is the only form of fuel which is untaxed, and is likely to remain so until a system of worldwide taxation can be agreed.

But the Commission believes the EU should pave the way now, so that it can go to a conference of the International Civil Aviation Organisation in the autumn of next year prepared to back a tax which, while inevitably putting up air fares, would also trigger long-term benefits for air pollution, smog formation, acid rain, climate change, and the depletion of the ozone layer. A British government spokesman said Mr Brown would welcome the idea on Monday, but would insist on the need for "flexibility" until an international accord can be achieved.

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