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German air passenger tax increase threatens economy and decarbonisation, IATA warns

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In December last year, the German government announced it would be increasing the aviation tax for passengers instead of the kerosene one for airlines. Although also against a kerosene tax, the International Air Transport Association (IATA) says the increase, which took effect on 1 May, will weaken the country’s economy and damage aviation’s ability to decarbonise.

The aviation tax has increased by 19% to between €15.53 and €70.83 per passenger, depending on the route. According to IATA, this will make Germany less competitive in key economic areas such as exports, tourism and jobs and further affect the country’s air transport recovery from the pandemic, which is one of the slowest in the EU, with international passenger numbers still 20% below pre-pandemic levels.

When Germany’s economic performance is anaemic at best, denting its competitiveness with more taxes on aviation is policy madness.

Willie Walsh, IATA’s Director General

“The government should be prioritising measures to improve Germany’s competitive position and encouraging trade and travel. Instead, they have gone for a short-term cash-grab which can only damage the economy’s long-term growth”, said IATA’s Director General, Willie Walsh.

Moreover, the association points out the tax, which was supposed to go to helping the industry decarbonise, will ultimately hamper those efforts. The German government coalition agreement originally stated that revenues from aviation taxes would directly fund the much-needed production of sustainable aviation fuel (SAF), but this commitment has been broken. Instead, the aviation tax increase came as a solution to fill an €11.1 billion hole in the country’s €445 billion federal budget.

Furthermore, the German government appears to have “an unhealthy obsession with aviation taxes”, Walsh commented on the country being in favour of the European Taxation Directive, which would add a tax on jet fuel. “Time and again, we see taxation that was supposed to help the industry decarbonise be stolen and then lost in the general budget.”

Surveying German residents, IATA says they are deeply sceptical about the efficiency of “green taxes”. 75% agreed with the statement “Taxation is not the way to make aviation sustainable” and 72% agreed that “Green taxes are just government greenwashing”.

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