EU debates aviation fuel levy to fund aid

Moves to add as much as €10 (£7) to the price of an airline ticket to raise cash for the developing world will be discussed by Europe's finance ministers this week, as the push to slap a levy on aviation gathers momentum.

Moves to add as much as €10 (£7) to the price of an airline ticket to raise cash for the developing world will be discussed by Europe's finance ministers this week, as the push to slap a levy on aviation gathers momentum.

Luxembourg, which holds the presidency of the EU, said yesterday that the bloc's 25 finance ministers will debate the idea over lunch at their scheduled meeting on Thursday.

The talks will test support for an aviation fuel levy among finance ministers to determine whether Luxembourg's Prime Minister and Finance Minister, Jean-Claude Juncker, has enough backing to table formal proposals.

The German magazine Der Spiegel reported that finance ministry experts in Berlin are recommending a tax of €300 per tonne of aviation fuel, a tax that could add €5 to €10 to the price of an airline ticket.

It seems unlikely that any detailed plan will be put forward on Thursday by Germany which, with France, identified a levy on aviation as a means of helping to meet the Millennium Development Goals. Finance ministers of Germany, Britain, France and Italy agreed at a G7 meeting in London this month to consider the scheme. In fact there are several revenue-raising ideas in circulation and any new tax would require the agreement of all 25 member states.

The industry points out that a flat kerosene tax would put EU airlines at a disadvantage to competitors who purchase fuel outside the 25-nation bloc. However, a levy applied voluntarily by member states - or even one paid by consumers who agree - would not hit the competitiveness of most EU operators.

Alternatively a tax on intra-EU flights would keep a level playing field. Such an idea is also favoured by the EU transport Commissioner, Jacques Barrot, on environmental grounds.

The low-cost airlines in particular are expected to fight any plans that might deter consumers from flying and, with a general election looming, Tony Blair last week told MPs that he will not "slap some huge tax on cheap air travel".

Nevertheless the Government says it is not, in principle, against using aviation as a source of revenue for developing countries.

A British official said yesterday: "Meeting the Millennium Development Goals is one of Britain's key priorities and we will look at any proposal that will increase development spending though, at the moment, there are no detailed plans regarding aviation."