Possible contribution on airline tickets
A European Commission staff working paper published on 1 September 2005 (SEC/2005/1067; and press release IP/05/1082 ) contains an analysis of how a solidarity contribution on airline tickets might be used by EU Member States as a source of development aid in order to help achieving the Millennium Development Goals.
Mandatory levy or voluntary contribution?
The paper must be seen in the context of the decisions to double development aid and to deliver better and faster, taken at the June 2005 European Council. Requested by the Council of Economic and Finance Ministers in July 2005, the staff working paper contains a technical analysis of the two options which Finance Ministers wish to consider further: mandatory or voluntary payment of a contribution by passengers under a common EU scheme in which Member States could voluntarily participate. A co-ordinated EU approach would deliver a political message of European solidarity towards developing countries, facilitate and clarify the operation of the measure for airline operators and passengers, as well as ensure that EC Treaty rules were respected.
The working paper does not represent a European Commission position on the mechanisms to be used; nor does it contain a Commission proposal for a specific mechanism. It is designed to assist Member States by providing a basis for them to consider further the instruments they could use to finance their Overseas Development Aid commitments. Member States have to make their decisions in this matter with a view to the UN General Assembly debate scheduled for the 2nd half of September, 2005. The paper analyses two main scenarios within which there could be a contribution on airline tickets:
- Voluntary-Mandatory: a voluntary participation of Member States in an international scheme introducing a mandatory levy for passengers at national level;
- Voluntary-Voluntary: a voluntary participation of Member States in an international scheme providing for a voluntary contribution by passengers at national level.
The levy/contribution rate envisaged in the paper ranges from € 1 to € 5 for intra EU and national flights, and from € 2 to € 10 for international flights.
Although the paper recalls that Community law does not prevent a Member State from unilaterally introducing a levy on airline tickets, it stresses that there are advantages to implementing a levy and/or a voluntary contribution in a co-ordinated manner. In particular, co-ordination at EU level would reduce potential negative effects.
Background: Taxation, Air Transport and Development Aid
In the context of its drive to enhance development aid's effectiveness (see IP/05/423 ) the Commission services put forward, among other things, a working paper on "New Sources of Financing for Development: A Review of Options" (SEC(2005) 467 of 5 April 2005 ). This paper also deals with tax instruments such as kerosene and flight departure taxes and is expected to stimulate debate at European and national levels. On 15 June 2005, a staff working paper on 'An analysis of a possible contribution based on airline tickets as a new source of financing development', was transmitted to the Council of Ministers (SEC(2005) 733). It should be added that development aid funding has been discussed in connection with the issue of taxation of aircraft fuel.
Also in June 2005, the EU has decided to increase its budgetary commitment to development aid from € 46 billion in 2006 to around € 66 billion in 2010. The Union has more specifically agreed to further strengthen policy coherence and put a special emphasis on sub-Saharan Africa, the region with the most difficulties in achieving the Millennium Development Goals. The EU remains the worlds' biggest donor of developing aid and the developing world's largest trading partner.