European governments could reap €34bn more in aviation tax

Across Europe, all countries apply a zero Vat rate to international air transport, and Ireland is among five countries to apply a zero rate for domestic journeys also. Picture: David Creedon

More than €34bn is being left on the table by European governments every year through low taxation of aviation, a new study by an environmental body has claimed.

The highly-respected European Federation for Transport and Environment, known as Transport & Environment (T&E), said current pricing for aviation at EU level "barely represent 16% of the total effective revenues that could be generated by properly taxing the sector".

Former president Mary Robinson and Environment Minister Eamon Ryan are among those in Ireland calling for aviation to pay more in taxation in response to the climate crisis. Aviation accounts for about 2% of total global emissions every year. 

According to T&E, ending annual tax exemptions for aviation would be akin to taking all German cars off the road for a year.

The €34.2bn in tax that could be collected every year would pay for 1,400 km of high-speed rail infrastructure, or the distance from Hamburg to Rome, T&E claimed.

Aviation director at T&E Jo Dardenne said: “Europe is bleeding money by not taxing the aviation sector. Airlines are edging close to record profits this year, whilst spewing dirty fuels in our skies. But governments are unwilling to touch their precious national carriers. 

How can they justify to citizens that drivers pay more taxes than Air France and Lufthansa for their fuel?”

The amounts left on the table through low taxation could rise to more than €47bn a year by 2025, T&E's study found.

The study recommends applying a fuel tax on kerosene and a 20% Vat rate on tickets, among other measures.

Across Europe, all countries apply a zero Vat rate to international air transport, and Ireland is among five countries to apply a zero rate for domestic journeys also.

Ms Dardenne said: "Taxation should not be perceived as a punishment but as a way to fairly charge those who benefit most from aviation's under-regulation. Those better off in society have been paying far too little for their flying habits."