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

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.

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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.

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Correspondence to Margit Schratzenstaller.

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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

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Keywords

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