Why should there be 0% VAT on international aviation fuel?

saabsaab

I mean how come it is isn't taxed at all? Home heating for people with Kero is taxed and motor fuels why should aviation get a free ride especially in these green tiimes.

Victor

There is an international treaty that prohibits tax on fuel for international flights. However, there is nothing preventing any state in implementing other taxes, e.g. departure / arrival taxes, steep airport charges, aircraft registration taxes, etc.

The should of course be carbon taxes, etc.

who what when

Agree 100%. There's 4 different types of tax on petrol. There's so many anomolies when it comes to climate related measures.

blackwhite

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32003L0096

Article 14 (b) exempts any fuels used for commercial aviation from Excise duties, but it does include a provision that allows a member state to restrict this exemption to Jet fuel only (i.e. Jet Kerosene).

Given the carbon tax on transport fuels is typically deemed to be another element Excise duty, it means that Ireland would likely be challenged through the EU Courts if we tried to bring in carbon tax on jet fuel.

VAT on aviation fuels is covered by the EU VAT Directive, Article 148(e), which grants a general exemption to "the supply of goods for the fuelling and provisioning of aircraft used by airlines operating for reward chiefly on international routes"

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A02006L0112-20220701

The EU is currently looking at making changes to these rules via the "Taxonomy" processes - but it's been very slow.

https://en.wikipedia.org/wiki/EU_taxonomy_for_sustainable_activities

Ultimately, Ireland can't place excise or VAT directly on jet fuel without EU-level changes. And we cannot place VAT on international air travel in general without an EU change also. It doesn't however, stop us placing passenger-level taxes on departures or arrivals to try and get the same impact.

saabsaab

https://www.boards.ie/discussion/comment/120681494#Comment_120681494

That explains why Ireland can't easily act alone. However it doesn't explain why there isn't a tax on it at EU level. Trucks etc. must pay.

blackwhite

https://www.boards.ie/discussion/comment/120681821#Comment_120681821

The EU is working to change it - but when it comes to changing the tax directives the EU always works incredibly slowly.

They've other carbon measures already in though - ETS applied to the aviation section since 2019

https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets_en

Victor

This suggests that there has been deliberate muddying of waters. https://en.wikipedia.org/wiki/Chicago_Convention_on_International_Civil_Aviation#Kerosene_tax

saabsaab

Thanks but that site won't open for me?

Victor

Try this and scroll down to "Kerosene tax".

https://en.wikipedia.org/wiki/Chicago_Convention_on_International_Civil_Aviation

blackwhite

The EU exemptions have zero reference to the Chicago Convention - it's a separate EU-level decision that was originally driven, as I understand it, but the desire to promote free movement within the union. There's a similar EU exemptions on fuel for commercial international shipping.

Bussywussy

https://www.boards.ie/discussion/2058299182/why-should-there-be-0-vat-on-international-aviation-fuel

"These Green Times" ffs

saabsaab

https://www.boards.ie/discussion/comment/120722287#Comment_120722287

??

Hotblack Desiato

There's nothing stopping any EU member state from applying excise duty to fuel for domestic or intra-EU flights. But as of yet no member state has chosen to do so.

Cpxxc

Do you really want to pay higher airfares?

Strumms

Aviation fuel is already an expensive commodity that is factored into ticket prices …….

to tax it ? The airline won’t be absorbing it. The passengers will with increased pricing.

The air transport industry, including airlines and their supply chain, are estimated to support around $10.4 billion of GDP into Ireland per annum.

so it makes little sense to apply more taxation. An industry with roughly 39,000 employees here, and big revenue earners for the state.

saabsaab

https://www.boards.ie/discussion/comment/120804959#Comment_120804959

That may be true but why should this sector get away with it? It doesn't happen with other transport.

Cpxxc

https://www.boards.ie/discussion/comment/120805002#Comment_120805002

The first country to tax Jet-A1 will never sell another litre. The airlines will tanker fuel rather than pay the tax. Also most airlines use fuel hedging, buying in advance effectively.

Price of fuel is super important. I worked in ops for an airline. One day I got a call from a Captain who wanted to refuel in, I think Bristol. I passed his request on but the manager freaked out because it was expensive. I delicately as possible passed on the bad news. He decided he had enough to get back.

It really is that important to the bottom line.

saabsaab

https://www.boards.ie/discussion/comment/120806621#Comment_120806621

Yes it would have to be EU wide.

Irish Steve

Where necessary, airlines have gone beyond just bringing extra fuel on the aircraft, no longer relevant as they don't use Shannon any more, there was a time when Russia brought their own fuel to Shannon by sea to enable them to refuel more cheaply.

Joe 90

https://www.boards.ie/discussion/comment/120807884#Comment_120807884

I think that the Russian fuel spec was a bit different from the Western spec. At least that's the impression I had at the time.

Mariehart

https://www.boards.ie/discussion/comment/122686096#Comment_122686096

It's just kerosene. Western airlines had to refuel in Russia. It wasn't different.

Lately we have absurd ideas from the usual suspects, banning private jets and the rest of us travelling to somewhere it isn't raining all summer.

This is an aviation forum

Let's defend it.

HTCOne

There are slight differences in Jet-A1 in different countries. The fuel in the US has a higher waxing temperature than that in Europe. Sometimes means aircraft who refueled in the US have to fly faster and/or lower to prevent waxing during winter at northern lattitudes.

Tenger

Also, aviation is actively working to reduce fuel burn (EG save money) and invest in 'sustainable aviation fuel', unlike other industries.

Its not prefect, but its doing its bit.

Hotblack Desiato

https://www.boards.ie/discussion/comment/122686133#Comment_122686133

The US uses Jet-A whereas most of the rest of the world uses Jet-A-1.

Wiki:

Differences between Jet A and Jet A-1
The differences between Jet A and Jet A-1 are twofold. The primary difference is the lower freezing point of Jet A-1 fuel:

Jet A's is −40 °C (−40 °F)
Jet A-1's is −47 °C (−53 °F)
The other difference is the mandatory addition of an antistatic additive to Jet A-1 fuel.

Hotblack Desiato

Years ago I used to hang around an aviation forum on Usenet where one of the resident trolls continually maintained that the crash of TWA800 was due to the use of "wide cut" fuel, i.e. Jet B. Nonsense of course.

Jinglejangle69

https://www.boards.ie/discussion/comment/122689738#Comment_122689738

Can you outline the details of this?

They are still one of the highest polluters globally.

Sustainable means what?? Give some hard numbers about how they are helping stop climate change? People are being taxed out of driving petrol and diesel vehicles and using fossil fuel heating.

Why should airlines be exempt? I thought this was an emergency and we are legally bound to follow suit.

Mariehart

Do you really wantto pay higher air fares?

Jinglejangle69

https://www.boards.ie/discussion/comment/122692089#Comment_122692089

We’re all paying higher taxes for everything else because of carbon taxes. Why should airlines get away with paying their share?

Mariehart

https://www.boards.ie/discussion/comment/122692099#Comment_122692099

No you will pay it. The airline pays nothing. The passenger pays the tax. The airline collects the tax that you pay and gives it to revenue. What kind of idiot are you who doesn't understand that? You are the taxpayer. Dunnes stores, for example takes tax, your money and gives it to the government.

Seriously why don't you know this? What an eejit.🤣

AnRothar

https://www.boards.ie/discussion/comment/122691971#Comment_122691971

Aviation has looked at various technologies and operational changes to reduce emissions.

Sustainable fuels.

Zero emission planes.

Then there was the suggestion on formation flying across the Atlantic.

Others are CCO (continuous climb) and CDO (continuous descent).

TBO (time based operations ⇒ years away)

Cookiemunster

https://www.boards.ie/discussion/comment/122691971#Comment_122691971

They are still one of the highest polluters globally.

Can you please stop spouting this nonsense. The airline industry (that also includes ground operations) is responsible for 2.5% of global emissions. It's not even top 10 of the highest polluting industries in the world. The fashion industry alone is responsible for 10%.

https://oizom.com/most-polluting-industries/

And when it comes to transport as a whole.

Despite being much more carbon-intensive than road travel, aviation only accounts for 11.6% of passenger transportation emissions. On the other hand, road transport contributes to 74.5% of all CO2 emissions in the transport industry.

SodiumCooled

Even if there was VAT it would likely be reclaimable as VAT is on diesel for the majority of businesses.

timmyntc

https://www.boards.ie/discussion/comment/122692142#Comment_122692142

(Hypothetical) VAT on fuel is different to VAT on a plane ticket. Airline passengers do not buy aviation fuel and do not pay VAT directly.

Yes ticket prices would increase, but only to whatever the market will bear. There is no guarantee of 100% of the VAT on fuel being passed on to the customer.

Hotblack Desiato

https://www.boards.ie/discussion/comment/122691971#Comment_122691971

People are not being taxed out of driving petrol and diesel vehicles or using fossil fuel heating.

Jinglejangle69

https://www.boards.ie/discussion/comment/122693404#Comment_122693404

How do you know?

Carbon taxes, how do you know people aren’t at the point they can’t afford to run their car or pay for heating?

What’s the fuel allowance for so? Why are we getting money off our gas and electricity bills from the government?

Hotblack Desiato

Carbon taxes are minimal. We're getting money because there's an election on the way.

Tenger

https://www.boards.ie/discussion/comment/122693488#Comment_122693488

Your dramatic tone implies that a majority of people are unable to pay for fuel because of "carbon taxes".

There are always people in financial distress, regardless of taxes.

saabsaab

https://www.boards.ie/discussion/comment/120806621#Comment_120806621

So they get away with it. I guess it would have to be EU wide.

artanevilla

https://www.boards.ie/discussion/comment/122686114#Comment_122686114

This is incorrect, it's not just kerosene. In fact there is a AD related to the usage of TS-1 (Russian) fuel on the CFM56 and it's effect on certain HMUs which has caused in-flight shutdowns.

It's a significant enough issue that operators will issue fuel statement stating whether the engine has or has not had more that 50% of it's fuel uptake as TS-1 when transacting engine/HMUs.

Hotblack Desiato

https://www.boards.ie/discussion/comment/122695589#Comment_122695589

As one of only three island nations in the EU, we'd be mad to either come up with our own aviation tax e.g. departure tax, or support or permit the taxation of aviation at an EU level.

We can't just hop onto a train or coach if we have to travel to another EU state. It would be a huge disincentive to do business in this country and hit our tourism industry expecially hard. Our relative geographical isolation is already a huge factor in the cost of living / doing business here and we'd be mad to make it worse.

sandbelter

https://www.boards.ie/discussion/comment/122695589#Comment_122695589

It's more efficient to tax the passenger at the point of sale and change the rate for equity reasons depending on whether you fly first, business or economy. Some nations already do this.

VAT on air fuel comes with it's own issues. Should it be levied at the point of embarkation or consumption (where the pollution is actually generated).

What rate should be used?

Should that rate be decided at a sovereign level or a multilateral level and by whom?

How do you appeal what you believe is an unfair assessment?

Finally, what happens to the environment in the long term? Will planes take longer detours to avoid high tax destination (Russia (presanction) and Mexico are already examples of countries that have already high overfly charges). There’s naturally going to be a natural interest in flying in international/trans oceanic (no VAT) airspace as a result and we can already see a foretaste of this with Middle East and India flights to/from Australia/NZ flights flying deep into the Indian ocean to bypassing the traditional flight over Singapore and all the charges would would incur flying the northerly route.

Basically, if it was doable …it would be levied already. But there are serious practical obstacles to it.

JVince

Vat would be reclaimable anyway - just as any vat registered business can reclaim vat on diesel or kerosene if used in connection with the business.

So would simply be an accounting exercise

Excise duty is a different matter

Hotblack Desiato

VAT is a tax paid by the consumer not the business, no matter what the hospitality industry here would like you to believe!

Geuze

https://www.boards.ie/discussion/comment/122692099#Comment_122692099

Only people pay tax.

If a firm must pay more more tax, then the incidence of the tax falls on one of the following:

(1) the customers

(2) the staff

(3) the shareholders

Hotblack Desiato

^^^ I really don't know why so many people find that so hard to grasp

MrMusician18

The problem is that for aviation there is no path to carbon neutrality. Sustainable aviation fuel that is price competitive to todays jet fuel and electrification are so far away that that are not worth considering. The only real way to reduce aviation emissions in a meaningful way currently is to reduce demand. And the only way to do that is to increase it's cost or directly ration it. Unlike other industries, there isn't a true technical solution available.

This creates a problem for policymakers since every other industry will point to aviation and the pass it gets and complain that they have to make more expensive changes because that sector is not doing enough.

To force demand reduction I could see certain flights being prohibited especially ones where high quality rail alternatives exist.

Ultimately though if you want to see aviation reduce its emissions then the passenger will have to pay more. Is that what people want? I think not.

Podge_irl

Well as things stand everyone will be using 70% of SAF by 2050, though I don't put much faith in 2050 targets. The ramp up starts from 2% from January though.

magicbastarder

https://www.boards.ie/discussion/comment/122689738#Comment_122689738

sustainable aviation fuel? i have a bridge i'd like to sell you.

Podge_irl

https://www.boards.ie/discussion/comment/122725403#Comment_122725403

What is this based on? Seems a pretty outdated view of biofuels these days. While problems remain, it is genuinely predominantly recycled carbon.

magicbastarder

what makes it sustainable? diverting land away from food production, or farming unfarmed land so as not to do so, is 'sustainable' only in a greenwashing sense.

Podge_irl

https://www.boards.ie/discussion/comment/122725822#Comment_122725822

SAF is not made from agricultural produce. First generation biofuels in general are being phased out in Europe at least.

Again, it is recycled carbon that is already in the lifecycle.