France to introduce eco-tax on airlines flying from its airports

Wednesday, July 10, 2019

France will introduce a tax on airlines flying from its airports to help support the environment, as per the transport minister. The move is expected to raise around 180 million euros (U.S. dollars 202 million) from 2020. The news saw the airline shares dive down. Share prices of Air France (- 5.2 per cent) Ryanair (-4.8 per cent), easyJet (-4 per cent) and Lufthansa (-3 per cent) fell at 1255 GMT. As per Air France, planned French eco-tax would be ‘extremely penalizing’. It said 50 per cent of its flights were operated out of France, notably for its domestic network, where losses amounted to more than 180 million euros in 2018. The new tax would significantly hurt its competitiveness and represent an additional cost of over 60 million euros per year. The new French tax will be 1.5 euros for flights within France or the European Union, 3 euros for economy flights out of the EU, 9 euros for intra-EU business class and up to 18 euros for business class tickets out of the EU. Transit flights would not be taxed. The French government also said that from 2020 it expected to raise 140 million euros from reducing tax benefits on diesel for trucks. French President Emmanuel Macron’s government has said it wants to put the environment at the center of its policies, but late last year it abandoned an attempt to increase tax on diesel fuel following the ‘yellow vest’ protest movement. Transport Minister Elisabeth Borne told a news conference, “We have decided to put in place an eco-tax on all flights from France”. The proceeds would be used to finance daily transport in France, notably local trains. As per Climate Action Network, the government is targeting tax breaks for the most polluting industries such as trucking and airlines, but these modest measures will not significantly reduce greenhouse gas emissions. As per Lorelei Limousin said tax exemptions for jet plane kerosene fuel cost French taxpayers more than 3.7 billion euros per year.    

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