Belgium might introduce new environmental taxes on the airline sector

As part of a future revision of the tax code, the High Council of Finance (HCF) of Belgium is looking, in a 56-page report dated July 2021, for new revenue intended to finance tax cuts affecting labour.

The High Council of Finance believes “that the budgetary cost of the base scenario can be partially recovered by the introduction of environmental and climate taxes“. The HCF suggests three measures affecting the aviation sector, which currently benefits from many tax exemptions:

1. It indicates in its report that “the absence of excise duties on kerosene for the aviation sector and the absence of VAT on the sale of plane tickets are not justified by economic or social reasons and even less for ecological reasons.” The increase of the excise duty on jet fuel equivalent to diesel and gasoline would bring in 1.15 billion euros per year to the State coffers.
2. A VAT of 6% on plane tickets would allow Belgium to garner 202 million euros per year.
3. The HCF is also putting on the table a third measure: a boarding tax on air travel of 10 euros per plane ticket for departures (transfer and transit included), with an estimated revenue of 142 million euros for the State.

In total, the aviation sector could thus contribute 1.5 billion euros to the State budget of Belgium.

The HCF is of the opinion that Belgian support for European and international initiatives in this field is highly desirable; indeed, unilateral initiatives by Belgium would harm the competitive position of its airline industry. However, this objection does not apply to the introduction of a boarding tax, since this already exists in several neighbouring countries.