Skip to main content

Sustainability-oriented tax-based own resources for the European Union: a European carbon-based flight ticket tax

Empirica volume 44, pages 665–686 (2017)Cite this article

Abstract

The failed attempts of several European countries to introduce a flight ticket tax and the pressure on those European Union Member States still levying such a tax clearly demonstrate the limits of national aviation taxation. Assigning a carbon-based flight ticket tax to the EU level would reduce the tax enforcement problems inherent to mobile tax bases and put a stop to harmful tax competition between EU Member States. By replacing a part of national contributions to the EU budget a flight ticket tax can strengthen sustainability-orientation of the EU system of own resources. Using a new data set, which assigns to approximately 75 to 90% of the respective intra and extra EU routes flown in the year 2014 the corresponding carbon emissions per passenger, the paper estimates the expected revenue from implementing a carbon-based flight ticket tax at the EU level for carbon tax levels between 25 and 35€ per ton of carbon emissions.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

USD 39.95

Price includes VAT (USA)
Tax calculation will be finalised during checkout.

Notes

  1. For one of the rare exceptions see Keen and Strand (2006) and the literature cited therein.

  2. For the concept of sustainability and its dimensions see the literature reviews by Nerudová et al. (2016) and Dimitrova et al. (2013).

  3. For fundamental deliberations on and key features of sustainability-oriented taxation see Schratzenstaller (2016) and Schratzenstaller et al. (2017).

  4. In the tax competition literature the prisoner’s dilemma framework up to now has been applied to the case of internationally mobile capital only; for a (critical) review of this literature see Dietsch (2015).

  5. See for a survey of demand elasticities differentiated according to flight classes Gillen et al. (2003).

  6. The determination and exact quantification of the external costs for different transport modes in general and of their environmental costs in particular is a complex and difficult task. However, there seems to be a general consensus in the literature that environmental costs of air traffic and especially its contribution to climate change are by far the largest, particularly compared to rail transport; see, e.g., Delft and Infras (2011).

  7. http://www.icao.int/environmentalprotection/CarbonOffset/Documents/Methodology%20ICAO%20Carbon%20Calculator_v7-2014.pdf. For a very detailed presentation of the ICAO methodology see ICAO (2011).

  8. The revenues associated with one particular Member State comprised the revenues from all flights which depart from this Member State as well as the revenues from flights which arrived at this Member State but departed from a non-EU country.

  9. As they have for customs revenues collected by individual Member States and transferred to the EU as traditional own resources to finance the EU budget.

References

  • Auerswald H, Konrad K, Thum M (2011) Adaptation, mitigation and risk-taking in climate policy. CESifo Work Paper 3320

  • Bofinger H, Strand J (2013) Calculating the carbon footprint from different classes of air travel. World Bank Policy Res Work Pap 6471

  • Bundesregierung D (2012) Bericht an den Deutschen Bundestag über die Auswirkungen der Einführung des Luftverkehrsteuergesetzes auf den Luftverkehrssektor und die Entwicklung der Steuereinnahmen aus der Luftverkehrsteuer. Deutsche Bundesregierung, Berlin

    Google Scholar 

  • Chancel L, Piketty T (2015) Carbon and inequality: from Kyoto to Paris. Paris School of Economics, Paris

    Google Scholar 

  • Delft CE, Infras F (2011) External costs of transport in Europe. CE Delft, Delft

    Google Scholar 

  • Dietsch P (2015) Catching capital. The ethics of tax competition. Oxford University Press, Oxford

    Book  Google Scholar 

  • Dimitrova A, Hollan K, Laster D, Schratzenstaller M, Walterskirchen E, Weiss T (2013) Literature review on fundamental concepts and definitions, objectives and policy goals as well as instruments relevant for socio-ecological transition. WWW for Europe Work Pap 2013/40

  • European Commission (2005a) New sources of financing for development: a review of options. Comm Staff Work Pap SEC 2005:467

    Google Scholar 

  • European Commission (2005b) An analysis of a possible contribution on airline tickets as a new source for financing development. Comm Staff Work Pap SEC 2005:733

    Google Scholar 

  • European Commission (2011) Questions and answers on historic aviation emissions and the inclusion of aviation in the EU’s emission trading system (EU ETS). Mem11/139

  • European Commission (2016) European aviation environmental report 2016. European Commission, Brussels

    Google Scholar 

  • European Environment Agency (2007) Size, structure and distribution of transport subsidies in Europe. European Environmental Agency, Copenhagen

    Google Scholar 

  • Expedia (2016) Preparing for take off. Air travel outlook for 2016. https://viewfinder.expedia.com/img/HLG-ARC-Booklet.pdf

  • Farid M, Keen M, Papaioannou MG, Parry IWH, Pattillo CA, Ter-Martirosyan A (2016) After Paris: fiscal, macroeconomic and financial implications of global climate change. IMF Staff Disc Note 16/1

  • Fullerton D, Metcalf G (2002) Tax incidence. In: Auerbach AJ, Feldstein M (eds) Handbook of public economics, vol 4. Elsevier, Amsterdam, pp 1787–1872

    Google Scholar 

  • Gillen DW, Morrison WG, Stewart C (2003) Air travel demand elasticities: concepts, issues and measurement. Department of Finance, Ottawa

    Google Scholar 

  • Gordijn H, Kolkman J (2011) Effects of the air passenger tax. Behavioral responses of passengers, airlines and airports. Ministry of Infrastructure and the Environment, Den Haag

    Google Scholar 

  • Havranek T, Irsova Z, Janda K, Zilverman D (2015) Selective reporting and the social cost of carbon. CERGE-EI Work Pap Ser 533

  • HLGOR—High Level Group on Own Resources (2016) Future financing of the EU. HLGOR, Brussels

    Google Scholar 

  • IATA (2007) Estimating air travel demand elasticities. https://www.iata.org/whatwedo/Documents/economics/Intervistas_Elasticity_Study_2007.pdf

  • ICAO (2011) ICAO carbon emissions calculator. International Civil Aviation Organization, Montreal

    Google Scholar 

  • Jones B, Keen M, Strand J (2012) Fiscal implications of climate change. World Bank Policy Res Work Pap WPS5956

  • Keen M, Strand J (2006) Indirect taxes on international aviation. IMF Work Pap WP/06/124

  • Keen M, Parry I, Strand J (2012) Market-based instruments for international aviation and shipping as a source of climate finance. World Bank Policy Res Work Pap WPS5950

  • Keen M, Parry I, Strand J (2013) Planes, ships and taxes: charging for international aviation and maritime emissions. Econ Policy 28:701–749

    Article  Google Scholar 

  • Korteland M, Faber J (2013) Estimated revenues of VAT and fuel tax on aviation. CE Delft, Delft

    Google Scholar 

  • Kosonen K (2012) Regressivity of environmental taxation—myth or reality? In: Milne JE, Andersen MS (eds) Handbook of research on environmental taxation. Edward Elgar, Cheltenham, pp 161–174

    Chapter  Google Scholar 

  • Kosonen K, Nicodème G (2009) The role of fiscal instruments in environmental policy. European Comm Tax Pap Work Pap 19

  • Krupnick AJ, Parry I, Walls M, Knowles T, Hayes K (2010) Towards a new national energy policy: assessing the options. Resources for the Future and the National Energy Policy Institute, Washington, DC

    Google Scholar 

  • Leicester A, O’Dea C (2008) Aviation taxes. In: Chote R, Emmerson C, Miles D, Shaw J (eds) The IFS green budget 2008. IFS, London, pp 187–211

    Google Scholar 

  • Nerudová S, Rozmahel P, Dobranschi M, Litzman M, Hampel D, Janova J, Brogger B (2016) Sustainability of the taxation system. Mimeo, New York

    Google Scholar 

  • Nordhaus WD (1982) How fast should we graze the global commons? Am Econ Rev 72:242–246

    Google Scholar 

  • OECD (2005) The political economy of the Norwegian aviation fuel tax. COM/ENV/EPOC/CTPA/CFA(2005)18/FINAL. OECD, Paris

  • Schönpflug K, Paterson I, Sellner R (2014) Evaluierung der Flugticketabgabe. Update zur IHS Studie 2012. Institute for Advanced Studies, Vienna

  • Schratzenstaller M (2016) Sustainable tax policy beyond the tax ratio for the EU as core element of a “Fiscal Union”. In: Nationalbank O (ed) Toward a genuine economic and monetary union. Oesterreichische Nationalbank, Vienna, pp 141–157

    Google Scholar 

  • Schratzenstaller M, Krenek A, Nerudová D, Dobranschi M (2017) EU taxes for the EU budget in the light of sustainability orientation—a survey. J Econ Statistics (in press)

  • Thalmann P (2012) Global environmental taxes. In: Milne JE, Andersen MS (eds) Handbook of research on environmental taxation. Edward Elgar, Cheltenham, pp 456–476

    Chapter  Google Scholar 

  • Tol RSJ (2007) The impact of a carbon tax on international tourism. Transp Res Part D 12:129–142

    Article  Google Scholar 

  • Tol RSJ (2013) Targets for global climate policy: an overview. J Econ Dyn Control 37:911–928

    Article  Google Scholar 

  • Van Den Bergh JCJM, Botzen WJW (2014) A lower bound to the social cost of CO2 emissions. Nat Clim Chang 4:253–258

    Article  Google Scholar 

  • Weibust I (2009) Green Leviathan: The case for a federal role in environmental policy. Ashgate, Surrey

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Austrian Institute of Economic Research, Arsenal Objekt 20, 1030, Vienna, Austria

    Alexander Krenek & Margit Schratzenstaller

Authors
  1. Alexander Krenek
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Margit Schratzenstaller
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Margit Schratzenstaller.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Krenek, A., Schratzenstaller, M. Sustainability-oriented tax-based own resources for the European Union: a European carbon-based flight ticket tax. Empirica 44, 665–686 (2017). https://doi.org/10.1007/s10663-017-9381-7

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10663-017-9381-7

Keywords

  • EU system of own resources
  • Flight ticket tax
  • EU taxes
  • Carbon tax
  • Sustainability-oriented taxation