Are aviation taxes too high already?
Apparently the government has concluded that tax paid by the aviation industry is worth more than the environmental damage it causes. The British Air Transport Association commented:
The Government now admits that UK air travel more than covers its climate change costs. But they still seem intent on increasing the environmental taxes that air travellers are forced to pay.
Does the aviation industry more than cover its climate change costs? Asking two questions might indicate that the statement does not have a lot of meaning:
- Do the taxes have an appropriate impact on the level of aviation consumption? The airlines are arguing that the increases in Air Passenger Duty (or other tax) mean aviation should not be included in the EU ETS. Cap-and-trade delivers defined emission reductions – the effect of taxes on pollution depends on demand elasticity, which is unpredictable.
- If the taxes do cover the ‘climate change costs’, are they redistributed to the people upon whom the costs are imposed?
These questions a bit facetious, of course – the point is that climate change mitigation can only be measured in emission reductions, not just charges.
Finally, APT and other aviation taxes are not really environmental taxes. Although they are often framed in environmental terms their actual purpose is unclear. They are essentially sales taxes.