Taxing aviation fuel in Europe could be kicked into the long grass again by Hungarian proposals aimed at getting agreement, after more than 20 years, on the bloc’s approach to energy levies.
Hungary currently holds the presidency of the EU Council and in that role has suggested delaying taxes on kerosene until 2049 – 19 years too late to contribute to 2030’s target of cutting CO2 emissions by 55%.
Aviation, shipping and the Energy Taxation Directive
The aviation and maritime sectors have long benefited from a blanket exemption on fuel tax not available to other industries, such as automotive. Environmental campaigners see this lack of taxation as effectively subsidising a climate crisis, not aligned with the Green Deal, and has been called “insanity” by the EU Climate Commissioner.
Meanwhile, an Energy Taxation Directive has sought since 2003 to set minimum energy taxation levels across the bloc, with further reforms suggested three years ago. Several Member States have previously expressed support for minimum fuel taxation rates, including Belgium, France, Luxembourg, the Netherlands, and Sweden. What’s more, at the COP28 climate conference, Austria, Finland, Ireland, and Spain signed up with others to a Dutch statement on phasing out the subsidies for aviation and shipping.
EU countries are debating a delay in taxes on polluting jet and maritime fuels for a shocking 20 years, according to a draft of the Hungarian presidency’s proposal on the Energy Taxation Directive.
— Transport & Environment (T&E) (@transenv) September 12, 2024
This absurd idea would cause the EU to completely veer off course of its climate… pic.twitter.com/HPg7B0xEX9
Unanimity proves elusive
But scrapping the exemptions and implementing minimum taxes requires unanimous agreement from all EU members – a meeting of minds which has so far proven elusive. Even countries like Sweden, seen by many as a green pioneer, cannot stick to a plan internally: the northern European kingdom is set to scrap aviation tax in 2025 to boost its economy.
Now, Budapest’s latest idea to unblock the reformed 2003 directive is to put off taxing aviation and maritime fuels until 2049, with a chance for review in 2043. Unsurprisingly, that plan is likely to be welcomed by aviation lobbyists, such as Airlines for Europe (A4E), who warn that taxes could affect the bloc’s competitiveness and limit how much the sector can invest in sustainable fuel development and cleaner aircraft.
25-year delay is “absurdity”
Critics, however, have responded with derision to the idea of delaying the taxes for another quarter of a century.
“It’s hard to find the words to describe the absurdity of a proposal to delay the introduction of a jet and maritime fuel tax to 2049, if not for ever,” Jo Dardenne, from Transport & Environment group, has commented “With its proposal, the Hungarian government has completely obliterated the very purpose of this last piece of the Green Deal, which was to put a price on dirty fuels.”
