Another day, another country announces a new aviation tax. This time, it’s Germany, which, under pressure from the International Air Transport Association (IATA) and carriers such as Lufthansa, has rolled back on the idea of a kerosene tax and instead is passing the cost onto flyers.
Germany is looking to fill an 11.1 billion euro hole in its 445 billion euro federal budget. The shortfall follows a court ruling that it would be unconstitutional for the country’s coalition to reallocate 60 billion euros of unused pandemic debt to its climate and transformation fund (CTF).
Kerosene or passengers?
Left looking for savings and ways to raise funds, the coalition government had proposed a kerosene tax but that plan was heavily criticised by, among others, German flag carrier Lufthansa, which said it would mean the airline was at a competitive disadvantage.
Lufthansa CEO Carsten Spohr pointed out, speaking to German newspaper, Sueddeutsche Zeitung, that both the airline and German aviation were already battling too many levies, a situation that was putting the brakes on the German sector’s recovery. Sphor went on to note that, while 2023 was likely to see Lufthansa back up to around 91% of 2019’s passenger numbers, German air travel as a whole stands at just 80% of pre-pandemic levels, well beneath the recovery levels of European neighbours.
Other criticisms levelled at the kerosene tax were voiced less politely in a statement put out by IATA. Calling the kerosene tax “simply the wrong solution” to the country’s structural deficit, Regional Vice President for Europe Rafael Schvartzman said “making air transport even more expensive” would reduce German competitiveness.
Anti-kerosene tax arguments are well-worn by proponents of air travel, still Schvartzman also criticised the shift in the plan towards consumer taxation, saying, “let’s also remember that costs in Germany are already high. German consumers already struggle with impacts of expensive infrastructure, a 13-56 euro ticket tax, and face rising security charges.”
That customer levy, introduced in Germany in 2011, puts an estimated billion euros each year into the federal budget. The increase now proposed will raise an additional 650 million from German air passengers.
Germany is not alone in using fiscal levers to raise money from polluting transport. But Schvartzman said the government sees aviation as a “cash cow”. “If the government needs to increase its overall tax revenue it should look to aviation as an economic catalyst to be nourished,” he said.