Right tax or wrong tax?

Some people may argue that there is no such thing as a ‘right tax’, but I think that in our society they are a legitimate way of funding government. However, the plan by the European Finance Ministers to create an airline tax to fund development aid (they are meeting today) is of course plain lunacy. Obviously every self respecting airline association (from the charter one, IACA, via the Association of European Airlines AEA to IATA) is fulminating against the proposals – and they would, ’cause that’s their job. And sometimes they miss the mood of the moment a little bit by protesting too sharply against everything that will cost them more, but in this case they are right. Targetting taxes at one segment of commerce doesn’t make sense. Aviation doesn’t merit a special position because it is aviation (as it has been acting like for a long time) but taxing air travel is the same as slapping a tax on nappies, chocolate or CDs to fund development aid. If we as a nation or continent want to increase development aid – and I personally think we should – our politicians should not be afraid to raise general taxes to pay for this.

Having said that, I also think the industry should be more real about fuel tax – because that is going to come, and makes much more sense. Again aviation thinks it should get special treatment, and not pay tax on fuel – well if I fill up my car I pay fuel taxes, so aircraft that pollute the skies by burning fuel should do the same. Perhaps a simplistic analogy – but fuel use is and should be taxed for everyone.

Government regulation is still very pervasive in the airline industry – it will be a long time (and many blogs) before that has been brought to levels that other industries enjoy – and it may get worse before it gets better.

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