Finance ministers agree Africa-aid ticket tax plan

16th May, 2005

EU finance ministers have agreed in principle for a tax on airline tickets to fund development aid in Africa. Countries can choose whether to make it compulsory.

European Union finance ministers yesterday agreed to impose a tax on plane tickets to fund development aid programmes in Africa, prompting despair from airlines.

EU finance ministers emerged from a meeting in Luxembourg on 14th May with an agreement in principle for a tax on airline tickets that would be compulsory in some countries, such as Belgium, France and Germany, while other countries would make the tax optional.

According to a document drawn up for the ministers’ meeting, a tax of €10 (£6.90) on airline tickets for flights within the EU and €30 on flights outside the EU would generate about €6bn for development spending.

The plan was devised by Jacques Chirac, the French President, to increase the amount of aid reaching the world’s poorest people. It was backed by Gerhard Schröder, the German Chancellor.

The EU’s executive commission will hammer out the details of the ticket tax ahead of the ministers’ next meeting on June 7. However, the plan will run into strong opposition from airlines, which will lobby energetically for the idea to be abandoned.

Airlines have predictably attacked the tax, describing it as “absurd”, “illogical”, “misguided and unhelpful”.

A Treasury official said that Gordon Brown, the chancellor, is considering whether to introduce the tax. It will be interesting to see whether Gordon’s Brown’s stated conerns about poverty and aid will be relegated behind the desire to maintain the £ 9 billion tax avoidance currently enjoyed by the aviation industry.