Friday, May 20, 2005

The EU's Africa-aid ticket tax plan

"There is no such thing as a good tax."
By Winston Churchill

I remembered this quote after I read that the European Commission was asked by European Union finance ministers (ECOFIN) on 11 May 2005 to draw up plans for on levy on airline tickets that each country would be free to implement to help pay for more development aid. The EU Ministers proposed that it be a voluntary contribution that some member states can turn into a mandatory contribution! Confusing! That is what I call harmonization “a la carte” (which can be seen as a contradiction with itself).

At this stage the ministers broadly agreed to a European Commission proposal urging EU member states to increase development aid to the equivalent of 0.56 percent of gross national income by 2010 and to 0.7 percent by 2015. This could mean a levy of something in the region of 1 to 3 euros in all flights. But some experts say that a tax of €10 (£6.90) on airline tickets for flights within the EU and €30 on flights outside the EU would generate about €6bn for development spending. British Airways already described the tax as "absurd" and "illogical" and said there was no reason why airline passengers should be singled out to make a contribution to aid projects. Let’s see how this story develops in the near future.

PS: This EU maneuver to tax air flights comes after the Brazilian president Lula da Silva proposed to the G8 a tax on the arms trade. For myself I prefer this idea (perhaps because I don't buy arms!).


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