Axe the tax

GERMANY'S completely unexpected government announcement of an airline tax, as reported elsewhere in AERBT, has brought an unprecedented response.  Essentially the Federal authorities have said that they want to raise €1bn annually from the aviation industry by way of duty.  No details appear to have been given and it is not known whether this is an arrivals tax, departures, and if connecting passengers have to pay.  In Holland a similar imposition failed, common sense prevailing.  "The most vulnerable part of the industry is in Europe.  The last thing the industry here in Europe needs is additional taxes and measures that will slow down economic growth," IATA Chief Economist Brian Pearce told reporters.  Commerzbank analyst Frank Skodzik said the burden for Lufthansa would be about €200m a year, assuming the carrier is able to pass on half of the tax to passengers.  “The tax is supposed to help the environment by discouraging people from flying,” said AEA Secretary General Ulrich Schulte-Strathaus, “while at the same time pouring a billion Euros into the treasury.  But if a passenger flies and pays the tax, he is impacting the environment.  If he doesn’t fly, the treasury doesn’t get his money.  A classic example of doublethink.” www.iata.org

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