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European Union tax on U.S. airlines illegal, say opponents

The EU's plan to tax American airlines flights landing in member countries is being met with stiff resistance. Maybe.
The EU's plan to tax American airlines flights landing in member countries is being met with stiff resistance. Maybe.
World Factbook

A European scheme to tax Americans in the name of saving the environment is being slammed by U.S. lawmakers on both sides of the aisle. But are the Democrats and some Republicans merely against the Europeans collecting those taxes from Americans because they want that power reserved for the IRS?

While bi-partisan cooperation appears to be rare in the U.S. House of Representatives, this week Republican and Democrat members overwhelmingly voted against U.S. participation in the European Union’s costly emissions trading scheme (ETS) that would impose new emissions taxes on U.S. and other nations’ air carriers flying into and out of the European Union countries.

"Although proponents of the EU tax say it will not have any impact of U.S. citizens, truth be told, the cost of this new tax will be passed on to the passengers in higher airfares," says political strategist Mike Baker.

The “European Union Emissions Trading Scheme Prohibition Act of 2011” (H.R. 2594) is bipartisan legislation that was introduced in the House by Transportation and Infrastructure Committee Chairman John L. Mica (R-FL), Full Committee Ranking Democrat Nick J. Rahall (D-WV), Aviation Subcommittee Chairman Tom Petri (R-WI), Aviation Subcommittee Ranking Democrat Jerry Costello (D-IL), Aviation Subcommittee Vice-Chair Chip Cravaack (R-MN), and other Members of the House. The bill passed the House of Representatives overwhelmingly by voice vote.

“This appropriately named EU scheme is an arbitrary and unjust violation of international law that disadvantages U.S. air carriers, threatens U.S. aviation jobs, and could close down direct travel from many central and western U.S. airports to Europe,” Mica said. “Congress and the United States government will not support this ill-advised and illegal EU tax scheme.”

“Reducing aviation emissions is a goal that is worth pursuing, but the EU’s go-it-alone approach will fly in the face of the international community and is not the way to find an international solution to an international problem,” said Rahall.

“Only through international dialogue will we reach consensus on how to deal with a global challenge, but I am confident that, if our European friends will act in good faith, we will more than rise to the occasion. For the meanwhile, this bill will protect U.S. airlines and all Americans who rely on them for travel and employment from the unjust effects of the EU’s plan," Rahall added.

“The European Union is unilaterally attempting to impose an illegal scheme on American airlines,” said Petri. “This is unacceptable for all sorts of reasons. The money the EU is attempting to extract from our airlines would come at the expense of our much-needed investments in ‘NextGen’ (Next Generation) technologies to upgrade our air traffic control system, and the purchasing of new aircraft -- just two proven methods of improving environmental performance.

"If the EU gets away with this unilateral scheme, what's to stop them from imposing all sorts of new ‘eco-charges’ on other activities outside the EU? And we don’t even have a guarantee that the fees will be used to benefit the environment,” Petri noted.


“The EU’s approach on emission controls is misguided and illegal,” said Rep. Costello. “With today’s vote the House of Representatives joins the Obama administration, other EU member states and affected countries, and our domestic aviation industry in opposing the EU’s Emission Trading Scheme. Instead of this unilateral approach, the EU should work with us through the International Civil Aviation Organization to craft a plan that is fair and effective.”

“The ETS scheme is equivalent to the paying of ransom to the Barbary pirates for safe passage,” said Cravaack.

Last week, Mica, Petri and other Members of the Committee led a bipartisan Congressional delegation to Montreal to meet with International Civil Aviation Organization (ICAO) leaders, representatives of the EU, and other officials regarding U.S. opposition to the EU’s tax scheme. ICAO is the primary organization that sets international aviation standards.

If imposed on January 1, 2012, the EU aviation tax scheme would apply to U.S. and other nations’ flights into or out of an EU airport, regardless of how long that flight is in EU airspace. Airlines would be required to pay an emissions tax to the EU Member State to which they most frequently fly, without any requirements that EU countries even use these fees in aviation emissions reduction efforts.

H.R. 2594 prohibits U.S. aircraft operators from participating in the ETS. The bill also instructs U.S. officials to negotiate or take any action necessary to ensure U.S. aviation operators are not penalized by any unilaterally imposed EU scheme.

The Obama Administration testified before the House Committee on Transportation & Infrastructure in July that the EU ETS is inconsistent with international aviation law. According to additional testimony from that hearing, the Air Transport Association suggested that this scheme would cost U.S. airlines more than $3.1 billion between 2012 and 2020, which could be used to sustain more than 39,200 U.S. airline jobs.

Moreover, these costs could double if the cost of carbon allowances in Europe returns to where it was within the past two years, in which case more than 78,500 U.S. airline jobs could have been supported.

There is growing international opposition to the ETS. Other nations that have voiced opposition include Argentina, Brazil, Chile, China, Colombia, Cuba, Egypt, India, Japan, the Republic of Korea, Malaysia, Mexico, Nigeria, Paraguay, Qatar, the Russian Federation, Saudi Arabia, Singapore, South Africa, the United Arab Emirates, and the member States of the Latin American Civil Aviation Commission (LACAC).

Even EU Member States, including Italy, the Netherlands, France, Belgium, and Spain, are calling for postponement of the EU ETS due to confusion over its implementation and opposition and potential retaliation from other nations.

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