Legal Challenge By US to German Environmental Aviation Tax



Guardian.co.uk



US legal complaint filed against Germany’s air transport tax.

Overshadowed here in London last week by the UK budget, news broke about further dissatisfaction with European legislation which impacts on the business performance of overseas airlines.  Within the next two months, the US aviation trade body A4A will file a detailed complaint with the German Fiscal Court in Kassel about the estimated €1 billion a year German air passenger tax, introduced in January 2011.  At the same time it will urge a referral of the case to the German Federal Constitution Court.   This news is in addition to the possibility of current threats of international retaliation against the EU because of the EU’s insistence on the imposition of a €4 million annual cost on international airlines through the EU Emissions Trading Scheme.  The ETS was introduced last year but Airlines do not have to pay the EU until 2013.  Hence despite current brinkmanship by the EU Environmental Commissioner over threats of trade sanctions and retaliation from many countries,  a compromise may eventually be agreed on and avoid a potential tit-for-tat trade war.

Unlike the UK’s much more expensive Air Passenger Duty that the UK recently declared was not an environmental tax but a debt reducing  revenue earner,  Germany’s estimated €1 billion passenger tax is described as an environmental tax.  It costs €45 per passenger on long-haul, €25 on medium-haul and €8 on short-haul flights and charges airlines with U.S. flights the highest of three tax brackets imposed by the scheme

Representing  fourteen North American airlines,  A4A said in a statement  last week http://www.airlines.org/Pages/news_3-21-2012.aspx  that while its members had until now complied with the German tax under protest, they were now pursuing legal action because it ‘violates several long-standing international agreements, including the Chicago Convention, the US-EU Open Skies Agreement and the German Constitution’.

“Germany cannot arbitrarily close its budget gap on the backs of the U.S. airlines and their passengers who already pay taxes at excessive rates. This is a short-sighted cash grab that will do more harm to the German economy than any short-term benefit that the tax revenue may bring the country’s coffers.”

These are all things the UK airlines, aviation industry experts, the unions, MP’s and UK business bodies have said repeatedly about the UK’s Air Passenger duty whose four distance related bands go up by 8% this Sunday 1^st April.  Economy passengers flying from UK airports to the USA will pay £65 APD - that’s €77.75!!  Premium cabin passengers will pay double.    It will be interesting to see if the A4A action is successful and if so,  whether APD will be next in line for an overseas legal challenge.