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The European Commission has embarked on a programme of tax harmonisation
which will increase the cost of fuel in most European countries from
January 1st 2007.
In the December issue of the IAOPA-Europe e-news we reported on a
campaign headed by AOPA-Sweden to awaken national governments to the
threatened loss of a tax exemption which allows countries to apply lower
rates of tax to avgas, at their own discretion. We urged national AOPAs
to get their governments to apply for a continued exemption. Most did
this. Unfortunately, the European Commission has decided not to offer
continued exemptions, and there is nothing European countries can do
about it - if the European Commissioners choose not to offer the
exemption, there is no mechanism by which nations can request it.
The situation is best summarised by the British Business and General
Aviation Association, with whom AOPA UK has mounted a joint campaign on
this issue. Their chief executive Mark Wilson says:
The UK, together with France, Portugal, Sweden and Malta applied in
October 2006 for an extension of the exemption of private pleasure
aviation from EU minimum excise duties on aviation fuel. The
applications were made to the European Commission. According to the
applicable procedure, the Commission has the exclusive right to propose
EU member states in the Council to grant a new exemption, extending the
existing exemption which is due to expire by the end of this year. The
ultimate decision is then up to member states in the Council.
Regrettably, the Commission on 30 November 2006 decided not to propose
to member states an extended exemption of aviation fuel used for private
pleasure aviation. Without a Commission proposal on the extended
exemption, member states have no means of granting such an extended
exemption. It is the exclusive right of the Commission to decide whether
to propose an extended exemption or not, and member states cannot oblige
the Commission to do so. 'The Commission decision means that as of 1
January 2006, all EU member states will be obliged to apply EU minimum
excise duties on aviation fuel for private pleasure flying. Such minimum
excise duties already today apply in 15 out of 25 member states, who in
the past decided not to make use of the exemption granted until the end
of the year. 'The Commission decision of 30 November 2006 does, however,
allow member states, whose private pleasure flying sector will suffer
difficulties from the end of the excise duty exemption, to adopt
unspecified measures aimed at "alleviating or mitigating problems of
transition to the regime of standard taxation".
'This decision will affect AVGAS and JET A1. The ³minimum² duty rates
may be found here.
The key issue now is to ensure the UK adopts this decision sensibly,
using the mitigations measures where possible. For instance the AVGAS
duty today is only about 2p a litre below the EU minimum for unleaded
motor fuel so there should not be a need to add the full 29p per litre
difference between AVGAS and leaded motor fuel that exists today. The
other critical area centres on the description of ³private pleasure
flying². The Directive notes, ³For the purposes of this Directive
Œprivate pleasure-flying¹ shall mean the use of an aircraft by its owner
or the natural or legal person who enjoys its use either through hire or
through any other means, for other than commercial purposes and in
particular other than for the carriage of passengers or goods or for the
supply of services for consideration or for the purposes of public
authorities.²
'I do not need to emphasise how important this decision could be to
General Aviation. I have already spoken with Martin Robinson of AOPA and
we would be pleased to meet with you all to discuss the best way to take
this issue forward. Martin and I are already in contact with our
European colleagues to see how they (for instance, Germany) have made
the Directive work without use of derogation. We will revert with any
information received.'
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