EU Plans For Aviation Fuel Tax Hit Impasse

EU plans to tax polluting aviation fuels have reached a stand-still as the member states struggle to agree to raising the price of fossil fuels, according to Reuters.

• EU members are negotiating an overhaul of energy taxes to align them with climate change targets. The last update to energy taxes was 2003.
• Under the initial proposal made 2 years ago, the minimum tax rate for aviation fuels would be increased gradually over a period of 10 years, while sustainable aviation fuel (SAF) would receive a 10-year tax holiday to make them more price competitive.
• The measures would also make alternative forms of transport, such as electric trains, more competitive against short haul flights.
• However, some member states are concerned with the timing of the measures, which could be implemented before the next European parliament elections in 2024. There is also no consensus on whether to agree EU-wide minimum tax rates for polluting fuels.
• Any change requires unanimous approval with from all 27-member states.