IATA criticises German aviation passenger tax hike

Tax may weaken German economy & hamper decarbonisation: IATA
/ New Delhi
IATA criticises German aviation passenger tax hike
IATA criticises German aviation passenger tax hike

International Air Transport Association has criticised the hike in aviation tax in Germany, saying it would hamper decarbonisation of the sector and hurt German economy.
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The German aviation tax increase has drawn harsh criticism from the International Air Transport Association (IATA), which says that the tax increase will hinder aviation’s efforts to decarbonise and will undermine Germany’s economy. 

In a press statement, IATA says that on May 1, German taxes on flying increased by 19 pc to between EUR 15.53 and EUR 70.83 per passenger, depending on the route. 

IATA says that this tax will make Germany less competitive in key economic areas such as exports, tourism and jobs. It will further affect Germany’s air transport recovery from the pandemic, which is one of the slowest in the EU. 

The statement adds that Germany’s international passenger numbers, for example, are still 20 pc below pre-pandemic levels. 

IATA also warned that the tax increase will hamper the industry’s efforts to decarbonise. Aviation has a goal of reaching NetZero CO2 emissions by 2050 and sustainable aviation fuels (SAF) are vital to this effort. 

It says that the German government coalition agreement originally stated that revenues from aviation taxes would directly fund production of SAF, but this commitment has been broken. 

Willie Walsh

Willie Walsh

“When Germany’s economic performance is anaemic at best, denting its competitiveness with more taxes on aviation is policy madness. The government should be prioritising measures to improve Germany’s competitive position and encouraging trade and travel. Instead, they have gone for a short-term cash-grab which can only damage the economy’s long-term growth,” says Willie Walsh, Director General, IATA. 

The statement adds that the weakening the German air transport industry with this tax makes it harder for airlines to invest in SAF, in a more fuel-efficient fleet and other decarbonisation efforts.  Furthermore, the German government appears sympathetic to the European Taxation Directive which would add a tax on jet fuel.

“The German government appears to have an unhealthy obsession with aviation taxes. On top of increasing the passenger tax, it is also in favour of a European jet fuel tax which will make it even more expensive to do business in Germany or for families to go on holiday. Our survey of air travellers in Germany shows deep skepticism about government claims for ‘green taxes’ as 75 pc agreed that taxation was not the way to make aviation sustainable and 72 pc agreed that green taxes are just government greenwashing. Time and again, we see taxation that was supposed to help the industry decarbonise be stolen and then lost in the general budget. And money taken out of the industry means that it has less money to invest in other decarbonisation measures,” says Walsh.

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