IATA urges Rejection of French Proposal for Aviation Tax to Fund Development

The International Air Transport Association (IATA) has urged governments to reject French President Chirac's proposal for a global tax on aviation to fund development.

“Airlines make a massive contribution to development by bringing tourists to destinations and transporting goods to markets. Making air transport more expensive is akin to biting the very hand that feeds development,” said Giovanni Bisignani, IATA's Director General and CEO.

Bisignani was responding to President Chirac’s speech at the opening session of the Ministerial Conference on Innovative Taxation to Fund Development. The French Government hosted the conference in Paris from 28 February to 1st March.

“Even those countries that this initiative is supposed to help are opposed to the tax. The African Union urged its member states to oppose the imposition of taxes that would add to the cost of air transport and that would drain away the income of the sector towards other activities. They rightly recognise aviation’s contribution to their economies,” said Bisignani.

In Africa, the role of air transport is especially important given the absence of effective ground transport networks. Air transport generates 470,000 jobs in Africa and contributes US$ 11.3 billion to African GDP. Africa enjoyed a 9.9% growth in passenger traffic in 2005 (against a global average of just 7.6%).

“UN Secretary General Kofi Anan’s support for the tax is particularly short-sighted and disappointing. First, it ignores the policies of the International Civil Aviation Organization (ICAO) - a UN agency - that seeks to eliminate taxes on the sale of air transport. More fundamentally, the tax proposal is at cross-purposes with the UN’s Millennium Development Goals. Imposing further taxes on air transport limits the industry’s ability to drive development. It’s time to replace misguided politicking with some clear thinking. We need real solutions to very pressing issues. France could fund development with EUR 3 billion each year - twelve times the intended tax revenue - simply by re-allocating a quarter of its rail subsidies,” said Bisignani.

The French tax on passengers to finance development in poorer parts of the world will come into force in July 2006. It will range from EUR1 to EUR 40 depending on distance travelled and type of ticket.

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