Airline Pollution Tax Could Benefit Homeowners

Homeowners living near Stansted Airport could benefit from the Government’s proposed environmental tax on airlines following the publication of the joint Treasury and Department for Transport document ‘Aviation and the Environment: Using Economic Instruments’ last week.

The Government document includes an analysis (Annex E) showing that houses near airports are devalued according to the level of aircraft noise and it is suggesting that this loss in value might be added to the airlines’ environmental tax bill.

Local residents may well feel entitled to argue that any recompense for a loss in value of their properties as a result of increased aircraft noise should go direct to the homeowner and not to the Government. Either way, the aviation industry faces an uphill struggle to resist such claims – not least if expansion at Stansted Airport were to be permitted.

At present, airlines are exempt from paying for the environmental damage they cause. The Government has identified three areas – carbon dioxide (CO2) emissions, the noise impact upon local communities and the damage to local air quality – where a tax might be applied.

If all three proposals were fully implemented, the tax on airlines would amount to about £1.6 billion a year in the UK. This would increase each year at more than the rate of inflation so that by 2030 the tax could amount to more than £5 billion per year.

Despite the strength of airline opposition to having to pay for the damage it causes, the Government cannot delay much longer in introducing an environmental tax. Under European law (Article 130 of the 1997 Treaty of Amsterdam) which came into force in 1999, all Member States are bound to the principle that the ‘polluter should pay’.

Norman Mead, the Chairman of Stop Stansted Expansion said: “Clearly this is a step in the right direction but there is still a very long way to go. The fuel tax exemption for airlines is a major injustice when one looks at the fuel tax paid by the motorist. Even trains must pay tax on the fuel they use. Exemption from VAT is another glaring example of the special privileges which airlines have had for years.”

“On this basis, the Government should put a stop to all airport expansion until we see what the true level of demand is when the subsidies stop,” he continued. “It is perverse distortion of the market when you can buy an air ticket to Europe for less than the cost of a local train ticket.”

Aviation is the fastest growing form of transport and it is estimated by the Royal Commission on Environmental Pollution that the effective subsidy is currently about £40 per air ticket.

In a related development, last month the Government announced a target to reduce UK emissions of CO2 by 60%, by the year 2050. It conveniently excluded aviation from this target, knowing that the rapid growth in air travel points to an eight fold increase in CO2emissions over the same period, absorbing most of the CO2 reductions achieved elsewhere.

ENDS