EU Favors Aviation Tax to Fund African Aid
February 16, 2005
The European Union executive Tuesday endorsed a proposal by France and Germany to tax commercial aviation fuel to raise funds for development in Africa.
But the tax should not become a substitute for normal aid programs, the European Commission said in reiterating calls for rich countries to give at least 0.7 percent of their gross domestic product in development assistance.
"The commission has said it is in favor of such a tax or any other source of finance for development on a number of conditions," chief spokeswoman Francoise Le Bail told reporters.
Among those conditions are that revenues raised must be in addition to a country's regular aid budget, not a substitute, and that the money be ring-fenced for development, she said. Moreover, "if a solution like the fuel tax is adopted, it is important to make sure that it will not injure the competitiveness of airlines," Le Bail said.
Airline's anger over proposal
Europe's airline industry had already reacted angrily after France and Germany proposed the tax at a meeting of G7 finance ministers on Feb. 5 that also gathered Britain, Canada, Italy, Japan and the United States.
"Of course we applaud humanitarian initiatives, but why target the airlines?" said Association of European Airlines secretary general Ulrich Schulte-Strathaus in an interview with AFP. "Our industry is in the midst of a fundamental crisis... only to be once again confronted with a measure designed to increase our costs," he said.
Funds raised heading for AIDS treatment
EU member states tax airplane kerosene at a low rate or not at all, and France and Germany have identified it as one means of raising money to fund immunization and anti-AIDS treatment in Africa.
At a meeting of EU finance ministers this Thursday, the two countries are expected to campaign for broader European support for the initiative. However, agreement on tax issues requires unanimity in the 25-nation EU, and some governments are known to be concerned about the impact on Europe's airlines in the absence of a coordinated international fuel tax.
The fuel levy is one of several ideas being pushed to raise development funds, including a French-backed tax on cross-border financial transactions and an "International Finance Facility" being promoted by Britain.