Motorists hit by high tax rates as airlines pay tiny carbon levy
MOTORISTS are paying hundreds of times more tax on petrol than air passengers do on jet fuel, official figures show.
Kerosene used for commercial flights is exempt from excise and carbon taxes, which ‘is an average effective carbon rate of less than €1 per tonne of carbon dioxide emitted’.
However, for petrol it is €258 and for diesel it is €184, according to the Central Statistics Office (CSO).
And the reason it is not taxed is airlines would simply fill up their jets at airports where it is taxed less or not at all. So under an international treaty from 1944 known as the Chicago Agreement, countries all agreed to scrap the duty to avoid a ‘race to the bottom’.
But now the EU is considering imposing a level tax across member states which will lead directly to higher air fares.
The loss to Revenue from not taxing jet fuel was estimated to be €626million in 2018, according to the CSO.
Travel i ndustry expert Eoghan Corry said: ‘To avoid a race to attract airlines with lower-taxed fuel, the aviation industry did a deal way, way back that there would be zero tax on aviation fuel.
‘It’s an international agreement by governments and aviation was run by governments in the old days with national airlines.’
However, he revealed there have been ‘rumblings’ recently in Brussels about how to tax aviation fuel.
‘ When l ow- cost aviation arrived there was a little bit of rumbling about this. I suspect i t’s being pushed i n that direction by our new Transport Minister Eamon Ryan. The whole idea is to try and size up what Ireland’s reaction would be to aviation taxes,’ Mr Corry explained.
A jet flying between Dublin and London could not easily divert to Jersey or the Isle of Man to refuel tax-free, as airlines now run on tight schedules, so the EU is believed to be looking at taxing aviation fuel with new duties. Mr Corry said: ‘The theory behind it goes way back, is probably under stress now and we’re now at a stage where they’re going to start taxing it. But what they’ll be doing is “softening up” the argument before they move in for the tax. It would very much mean higher air fares. Any tax would go straight onto the air fare.’
Petrol, mainly used by private motorists, had the highest average effective carbon rate in 2018 at €258 per tonne of carbon dioxide emitted.
The average effective carbon rate on diesel was €184 per tonne of carbon dioxide due to a lower excise duty rate than petrol.
AA director of consumer affairs Conor Faughnan said: ‘The motorist is paying where the air passenger is not big time, and that has been true for a long time.
‘Motorists are scapegoated for every environmental problem. It’s easy to kick the car user and it saves you having to blame anybody else or ask them hard questions. As ever, the consumer on the bottom rung of the ladder, in this case the private motorist, tends to get a hard time of it.’
The average effective carbon rate for ‘green diesel’, used on farms, was €39 per tonne of CO2. The CSO reported: ‘People living in rural areas often have fewer public transport options available to them and may have longer commuting distances.
‘Increasing the effective carbon price of diesel would probably have a greater impact on rural households than urban households,’.
A spokesman for the Department of Finance said: ‘Jet kerosene for commercial use is not subject to mineral oil tax, as per rules under the EU Energy Taxation Directive and the Convention on International Civil Aviation.
‘Since 2012, CO2 emissions from the aviation sector have been included in the EU Emissions Trading System and the sector is therefore subject to a carbon pricing mechanism.’
‘It would mean higher fares’ ‘Motorists are scapegoated’