The Belgian State lost €700 million in revenue last year due to tax exemptions and lower tax rates in the aviation sector.
Currently, the gap between actual revenue and what taxes would bring to the sector if there were no exemptions is €700 million in Belgium, the European environmental umbrella Transport & Environment (T&E), calculated. At the European level, the study found that governments were missing out on more than €34 billion by 2022.
Belgium's aviation sector benefits from unjustified tax exemptions, the group argued. For example, there is no paraffin tax set by Belgium, while the aviation tax and VAT (6%) are very low. Finally, there is only a carbon tax for flights within Europe.
"Taxation is not a punishment, but a socially just way to make the biggest emitters contribute fairly," said Naomi Cambien, mobility policy officer at Bond Beter Leefmilieu (BBL), which is a member of T&E, arguing that more than half of people in the country never fly, or do so just once a year.
"We see that it is mainly the highest earners who can make a lot of long plane journeys. It is only natural that they should pay for the impact of their flying habits. Revenue from fair pricing of aviation can be used for sustainable alternatives, such as a quality and affordable network of night trains." The current price of the tax gap is 350 times the amount the government provides to support these services.
An expensive missed opportunity
The group argued that this loss in revenue is in stark contrast with the expected rise in profits for the aviation sector as people once again go on holiday en masse. It added that, as air travel continues to rise to pre-Covid levels, the tax gap will only widen further. "By 2025, the amount could thus reach €950 million in Belgium," the report stated.
Tweet translation: "Every year, our country loses €700 million due to tax exemptions for aviation: No excise tax on paraffin, no VAT on airline tickets & particularly low flight tax, single carbon price for intra-European flights. It is time for an aviation tax with impact."
Both groups argued that tackling aviation tax exemptions should be a top priority for governments, especially as the effects of global warming on the planet's climate become ever more clear.
In 2022, ten European countries applied a ticket tax, including Belgium. However, the income this generated fell short of expectations during its first year.
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Cambien stressed that increasing tax on tickets from 6% to 20% via tax reform is a simple measure that the country can impose to tighten the gap. "The ongoing tax reform provides the perfect opportunity for this."
The study also recommends introducing excise duties on kerosene and extending the carbon market (ETS) to all departing flights from the European Economic Zone. Aside from closing the tax gap, BBL also argued that the drop in demand for air travel will reduce health damage from particulate matter and noise pollution, as well as CO2 emissions.
