Ireland fears EU aviation tax could pose cost and access issues for citizens

Finance ministers discuss plan to simplify bloc’s complex fiscal rules at Helsinki meeting

The Government has highlighted its concerns that proposals for a EU-wide aviation tax pose cost and access issues for Irish citizens. Photograph: Getty Images.

The Government has highlighted its concerns that proposals for a EU-wide aviation tax pose cost and access issues for Irish citizens. Photograph: Getty Images.

 

The Government has highlighted its concerns that proposals for a EU-wide aviation tax pose cost and access issues for Irish citizens.

The stance was raised ahead of EU finance ministers discussing the matter on Saturday at a meeting in Helsinki. Ireland will be one of only three remaining island states in the union after Brexit.

Speaking to reporters at the conclusion of a day-and-a-half of informal meetings involving EU finance ministers, European Commission vice president Valdis Dombravskis said some countries raised issues with a potential aviation levy, with Ireland “flagging certain concerns in terms of travel costs for their citizens”.

Sources said that the initial Irish concerns were raised at official level before the gathering. They do not represent a final Government position on the matter.

Finland, which holds the EU presidency, has put reform of energy taxation laws, which have remained unchanged for more than 15 years, as one of its top priorities as the union seeks to become carbon neutral by the middle of the century.

The EU’s energy taxation directive, enacted in 2003, is “outdated and poorly adapted to climate change challenges and developments in energy policy,” according to a document discussed by the ministers in Helsinki.

Finnish officials highlighted in documents prepared at the outset of the country’s six-month presidency of the union, which began in July, that possible measures to tackle climate change could include higher minimum taxes on energy, fossil fuel levies and an end of waivers for the air and seaport transport sectors.

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French finance minister Bruno Le Maire said that EU airline companies who enjoy tax exemptions and other waivers to compete with non-EU peers, should contribute more to fight climate change “either with taxes or with the purchase of more allowances” from the EU emissions trading system.

Meanwhile, finance ministers also discussed a report published earlier this week by the European Fiscal Board (EFB), an advisory body to the commission, which calls for a simplification of the EU’s complex fiscal rules to make public finances more sustainable and economies more stable.

The rules, originally set out in 1997, are set around the key elements that countries should not have an annual budget deficit of more than 3 per cent of their gross domestic product (GDP) and that their total public debt should not exceed 60 per cent of GDP.

However, amendments during the financial crisis have made the rules very complex and introduced layers of exemptions and exceptions.

The EFB has proposed that the rules should be boiled down to counties targeting a public debt ratio of not more thant 60 per cent of GDP. The Commission is set to review the rules by the end of the year.

Niels Thygesen, chairman of the EFB, told reporters on Saturday that it was clear from the discussion among ministers at the meeting that opinion is divided over the rules and how they are currently implemented and enforced.

“The ministers will have a very difficult tie ahead of them,” he said. “They don’t agree too much, frankly.”