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A December miscellany – VAT, Boris Island and palm oil

3rd December, 2010

There is constant stream of aviation stories on all sort of issues. We highlight 3 of them this week – VAT, Boris Island and palm oil. 

EU VAT consultation  

The EU has published a Green Paper and consultation on taxation. Among the questions it asks are:

*   Do you think that the current system of taxation of passenger transport creates problems either in terms of tax neutrality or for other reasons?
*   Should VAT be applied to passenger transport irrespective of the means of transport used?

VAT is an important issue for aviation – VAT imposed on all departing flights would raise about £4 billion pa (c £2bn on tickets and c £2bn on fuel).  It could be used to offset over 10% of the planned cuts to public services.

London Mayor lobbies for ‘Boris Island’

Mayor of London, Boris Johnson, has renewed his campaign for a new airport built on an artificial island in the Thames Estuary. We understand that proposals have been lodged with transport minister Philip Hammond. 

The government has ruled out a third runway and David Cameron has said there are no plans for an estuary airport. So while there is no apparent enthusiasm, a new airport has not been ruled out. It will be interesting to see what the promised new aviation policy says on the matter.

See also AEF comment on an estuary airport.

Palm oil in aircraft fuel?

Luftansa is to start trials on synthetic aircraft fuel. It has confirme  that the fuels will contain palm oil, obtained from a company called Neste Oil.

There is concern around the world about use of palm oil as a fuel. Oil palm plantations are destroying rainforest which, apart its social and biodiversity implications, causes massive emissions of greenhouse gases.  Use of biofuel is also driving up food prices and contributing to food shortages. Despite all this, proponents of biofuels say they are “sustainable”.

Note. There may be some fuel sources which are genuinely sustainable, for example waste cooking oil and waste food. But these sources only account for a modest proportion of biofuel and, with plans to greatly increase biofuel production, the proportion of such sources is likely to decline.