Final AssignmentAviation fuel is quickly becoming the fastest growing contributor to climate change, as it accounts for around 2% of global carbon emissions and if nothing is implemented, may rise to 6% by 2050. Along with the number of passengers expected to grow from 200 million to 500 million a year by 2030, carbon emissions can be expected to double due to more flights due to the increase. However, other modes of transport like buses and cars, and also the industrial sectors and the power sectors are expected to reduce their carbon emissions due to tough laws on fuel and tax. In this essay I will argue for both sides of the argument regarding the input of tax on fuel for air transportation.There is the Convention on International Civil Aviation, which is also known as the Chicago Convention. It regulates and coordinates air travel.
A document was signed on December 7th, 1994 and has been revised eight times, the most recent being in 2006. As of 2013, the Chicago Convention has 191 state parties which follow this agreement. Article 24 of this agreement says ‘any aircrafts flying to, from or across the territory of a state shall be admitted temporarily free of duty’.
This includes fuel, oil, and spare parts. After WW2, most countries extended this to all aviation fuel. This agreement will need to be reversed in order for the tax to be implemented.Firstly, the tax should be introduced because people who fill up their cars pay an average of 40p per litre of fuel when they fill up their cars, but the aviation businessmen do not pay anything when they fill up their planes with the fuel they burn. In the EU, this can lead to a shortfall of anything between €20 and €32 billion a year.
Considering if there is a sharp increase of passengers, and as a result more flights and planes, more fuel will need to be used, and the cost of the tickets will have to rise significantly in order for companies to pay their fuel taxes. Currently the environmental cost of carbon emissions alone is estimated to be around $50 per ton of fuel. It would cost $20 per passenger on a flight from New York to London, and this would be added to their ticket price. In addition, this tax should be considered because the longer aviation fuel is left untaxed, the more damage to the environment will be caused. This damage is created by aircrafts emitting heat, noise and gases which contribute to climate change. Even though there are measures in place to create efficient aircrafts for less CO2 emissions, they will likely be ineffective due to the continual growth of air travel with more passengers and therefore more trips.
It is important to point out that the owners do not pay any compensation for any environmental damage they may cause with their fuel emissions. Another good reason to tax fuel used in air transportation is that the people who purchase the tickets for airplanes may not actually know how much damage they are causing to the environment. One of the negative externalities of flying, the emissions, must be recognised by the people, and the only way they will notice it is if action is taken.
Some argue that since the richer fly most, and nearly 80% of flights are for leisure, tax on air travel would be fair and progressive, without being harmful to the economy.Finally, it is unfair that even though no tax is received from the aviation industry. They get subsidies for infrastructure support, and in the EU they receive an average of €3 billion (£2.5 billion) a year which allows them to build more airports and open new routes and trips to different parts of the world. If you compare this to how road users in the UK pay for the road infrastructure through their fuel tax and annual car tax (which is paid by everyone), it’s clear that this system isn’t exactly fair.
These companies are being allowed to pollute the world, not pay tax on their fuel and they are given large quantities of money for expanding.On the other hand, if a tax is enforced on aviation, there will be many costs and consequences. Before the tax is even enforced, there can still be issues. For example, for however long the UK stays in the EU, any move made to impose a tax will be contrary to EU law. This makes it difficult for any immediate action to be taken, but the UK can implement this tax after we leave the EU if it was considered.With every tax comes the people who will try to avoid it – this is especially true with aviation fuel tax. There is a chance that many companies will start ‘tankering’ their aircrafts, which involves carriers filling aircrafts as full as they can whenever they land outside of the EU.
This means they avoid paying tax, which in turn will increase the level of emissions. This will also render the tax practically useless if everyone starts avoiding it. Other measures will need to be put in place to make sure that this cannot happen.If the tax was imposed, and this new charge was added to tickets, it could cause a decline in people using air transportation, and they may be off better money-wise by using a train or other modes of transportation. It would also cause a lot of unhappy passengers, and in desperate measures, people may even try to go to other airports in other countries just to use their airports to avoid paying the tax.
People will not want to pay the extra fee on top of everything else they pay. They may also not understand why they are paying it.One group that would benefit from the taxation of aviation fuel is the government.
The tax would add around £39 billion to the economy, which can then be used to support under-funded hospitals, schools and other public services, and the money collected can be used where it is needed. It could even be possible that the revenue could be used to reduce other forms of tax, or make significant improvements on public services for the benefits of the people.Another group that would benefit from this taxation would be environmentalists and possibly future generations. When we make decisions about the environment, it is important to think about our lives as well as the lives of people to come after us. The tax would hopefully discourage the use of certain fuels because of their expenses, and we could even see a rise in planes being powered by more environmentally friendly ways. This change in tax would reduce demand which would have a clear advantage on the environment, and less climate change emissions. These groups need to realise that they are not going to be exempt from climate change measures, and if this tax is the answer for them to stop polluting, then it needs to be implemented.