Global Policy Forum

France Begins to Tax Flights for Aid

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By Julio Godoy

Inter Press Service
November 30, 2005

The French government approved a small levy this week on all commercial flights from France in order to fund development aid.

The government proposed additional taxation from one euro for economy class to 10 euros for business class on national and European flights. On intercontinental flights the tax would range from four to 40 euros. Officials say the tax will raise about 210 million euros (250 million dollars) a year. President Jacques Chirac has said the decision approved by his cabinet would be presented to parliament "in the weeks to come" and that the tax will come into force on July 1, 2006.

Chirac said the revenue from the tax would increase French financing of the struggle against pandemics in the developing world, especially AIDS, tuberculosis, and malaria. Chirac proposed this and other taxes, such as a tax on trade in weapons, at the UN General Assembly last year. The air travel tax will seek to address one of the millennium development goals (MDGS), a set of eight goals that cover a range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education.. The MDGs were adopted during the UN Millennium Summit in September 2000.

Development activists welcomed the French move, but the government immediately ran into criticism over the feasibility of such a plan, and on the need to coordinate action with the rest of the industrialised world. "It is always good to improve financing for development and against poverty, especially in the face of the challenges of the Millennium campaign," Benoit Miribel, director of the group Action against Hunger told IPS. "But organisations such as Action against Hunger must know what criteria will be used to distribute the new aid," he said. "For instance, which countries are supposed to profit from the new financial resources? Which channels are going to be used to distribute them?"

Miribel said the bulk of development aid is allocated from government to government, despite reports of corruption and inefficiency in many developing countries. Others say such a tax would be effective only if it is raised everywhere. "Otherwise, travellers using commercial flights originating in France can buy their tickets elsewhere in Europe, and avoid paying the tax," Gerhard Leithaeusser, professor of international economics at the university of Bremen told IPS. So far, only Norway and Britain have endorsed the French calls for a levy on commercial aviation to increase financial aid for development.

The British government already levies an Air Passenger Duty, and uses a part of the money for development aid. The duty ranges from 29 euros for European flights to 58 euros for other international flights. Outside Europe, only Chile has announced the creation of a similar tax, of two dollars on all international flights from capital Santiago. Other countries which initially supported the French proposal, such as Brazil and Algeria, have not announced similar measures yet. The United States has said it will not create such a tax to finance development aid.

Jean-Pierre Le Goff from the French National Federation of Commercial Aviation says the levy will be "useless". "The sums of money demanded to finance the MDGs are extremely high," he said. "If you compare these needs to the estimated outcome of the new French tax, you will see that the measure will be at its best of marginal utility." The World Bank estimates that the additional foreign aid required to reach the Millennium Development Goals by 2015 is between 40 to 60 billion dollars a year. Le Goff said European airlines flying out of France would lose up to a million passengers, with 4,000 job losses.

 

 

 

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