FAILURE TO THINK TAX THROUGH

20/05/2005

Thoughtless treatment of Europe’s airlines by EU finance ministers will prolong the continent’s economic woes, ERA underlined today in comments on a proposed air ticket tax to fund overseas development commitments.

“The last Commission expressed strong concerns that Europe is failing to deliver against its goals for the economy and much-needed improvements in Europe's international competitiveness. The proposed Poverty Tax on the intra-European airline industry, itself a key economic driver, has to be seen as a further self-inflicted wound,” said ERA Director General Mike Ambrose.

Europe’s airlines have a long track record of creating jobs and stimulating regional economies while delivering innovation for markets and the environment. ERA believes the sector plays a central role in growth.

“EU finance ministers have reached this decision without bothering to perform any kind of impact assessment on the effects of the new tax on the EU's economy and jobs. The ministers did not think this through when they chose the marginally profitable European airline industry as a source of funds for aid to developing countries,” commented Ambrose.

Choosing to discriminate against a primary industry such as air transport with the imposition of a potentially deflationary tax on consumer prices showed “a dismal failure of the imagination and judgement, and a gross dereliction of responsibility,” said Ambrose.

“Only healthy economies can afford to help ailing economies and play a part in protecting the global environment. Helping the Third World is a community duty, not an air transport duty,” he concluded.