Today’s Solutions: June 29, 2022

Since World World War II, it became standard to not tax fuel on international flights in order to incentivize commercial aviation—in contrast with taxes on fuel used by trucks and cars. But at the time where we need to reduce the negative impact of the aviation industry, it no longer makes to keep such an exemption in place, says the French government.

That’s why France is pushing forth an “eco-tax” that would charge a 1.5 euro ($1.69) fee on inter-France economy flights per passenger, and 3 euros ($3.38) for flights outside of the EU—with higher fees for business fliers. And, alongside the Netherlands, it has called for the EU Commission to finally end the exemption on taxing jet fuel, known on land as kerosene.

That jet fuel tax would be a separate, additional tax on top of the eco-tax, but both would have the same purpose: reducing emissions. Tax is a blunt tool to clean up aviation. Even the minimum tax on fuel would cause the price for a flight in the EU to go up by an estimated 10%. Emissions, however, would decrease in tandem: falling by an estimated 11%, and bringing the aviation industry closer to reducing net-emissions as part of the Paris Agreement. 

Ultimately, the tax would provide airlines with a greater incentive to be more fuel-efficient and to start finding cleaner ways to power airplanes.

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