Tax Proposed To Aid Africa, Possibly For General Revenue
By ANN Senior Correspondent Kevin "Hognose" O'Brien
The financial
ministries of the European Union are debating a new fuel tax.
At this juncture, the ministers have only agreed to commission a
study on the tax, which might apply to airline tickets, but more
likely would apply to aviation fuel, especially jet fuel, and be
transparently absorbed into ticket prices.
Explanations on the tax depend on whom you ask -- its original
sponsors want to extend aid to underdeveloped areas, especially
Africa, but other finance ministers want the money to deal with an
anticipated EU operational bureaucracy budget shortfall.
The tax itself is not without its opponents. Not surprisingly,
the nations that depend heavily on international trade and travel,
such as Ireland and Italy, are leaning towards opposition. Nations
that are largely self-contained, such as France, Germany and
Austria, favor the plan. The Netherlands and Luxembourg have also
supported it. The poorer countries, like Greece and Portugal,
depend on tourism, especially from New World extended families, and
are likely to oppose it, and Scandinavia and the new EU nations in
the East have yet to express an opinion.
Britain is in a difficult position, according to Reuters. Tony
Blair's government might have opposed the tax -- the island nation
is among the most dependent on air travel -- but Blair has been
leading the charge for increasing aid to developing world
countries. Vaccinations and other medical treatments are high on
the list of gifts the EU would give. But even Dr Schweitzer
depended on his donors; without a source of funds, any EU
development initiative is stillborn. This puts aviation dead in the
sights of some finance ministers.
The airlines, of course, oppose the plan. "[W]hy target the
airlines?" Association of European Airlines secretary-general
Ulrich Schulte-Strathaus told Agence France Presse.
Schulte-Strathaus was all in favor of humanitarian initiatives, but
saw the tax quite clearly as "a measure designed to increase our
costs."
Environmentalists, which blame airlines for three percent of
global warming, favor a tax exactly because it would cause airlines
to retrench. Indeed, the jet fuel tax has been proposed before, in
1997, on environmental grounds. At that time the proposal, which
originated in the Netherlands, drew little support.
This time around the fuel tax was proposed by French President
Jacques Chirac, and is strongly supported by Germany. Airline
tickets in Europe are too cheap, according to German Finance
Minister Hans Eichel. "Something has to be done," about low-cost
airlines, Eichel said. "When I take a taxi to Berlin airport, it is
almost more expensive than flying from Berlin to London."
But other European nations see the tax as suitable not only to
help the developing world, but also to lift the burden of the EU
operating budget off their own lands. These nations were staggered
by the size of the EU budget that is now under discussion for
2007-2013, and would like to limit its impact on their nations. The
benefit of using the aviation-fuel tax for the EU budget, according
to Austrian Finance Minister Karl-Heinz Grasser, is that it won't
stir up the citizenry: "[T]he population will not really notice
because it goes through plane tickets," which he preferred to the
alternative, "financing Europe through a measure that will really
impact on people."
The German minister, Eichel, did not agree on diverting any of
the tax from the development-aid project. "I advise against
broadening the discussion in this way.... Europe can and should
make a contribution to development policy but it can only do it if
it is solidly financed."
Grasser expects that the tax could raise as much as 20 billion
euros, assuming that it doesn't cause a drop in consumption from
2002's last available statistic of 60 billion liters. "But we are
only at the start of the debate ... the best-case scenario would be
for the USA to join as well," Grasser said.
The US may agree to
work with Europe on development aid, but odds of American support
for the fuel tax are absolutely nil. The proposed tax of Euros 0.25
to 0.33 per liter of jet fuel translates in American terms to about
$1.24 to $1.63 a US gallon. American politicians do not want to
face the electorate having approved a tax of this size for
traditionally unpopular foreign aid.
The recent tsunami emergency brought a generous outpouring of
support from both Europe and the USA, but it also stirred up some
mutual criticisms. Both sides of the Atlantic want to help those in
need, but their methods and cultures are not perfectly in tune with
each other. The airline-fuel tax is going to be very controversial
and may require both supporters and opponents to meet in the
middle. European nations have very few other options, if they want
to raise new revenues. Germany in particular is feeling the pain of
high unemployment and deficits.