The European Federation for Transport and Environment has said that the government of Ireland lost out on close to €760 million in revenue last year due to low levels of taxation in the aviation sector.
According to a new study by green group Transport and Environment, such an amount of money could pay for the Renewable Electricity Support Scheme of the government three times over, emphasising the high losses.
Of the total amount, it has been revealed that the government of Ireland lost out on €260 million from the activity of Aer Lingus alone. Moreover, it was noted that Aer Lingu did not pay €140 million in fuel as well as carbon pricing to its government.
Commenting on the losses, Aoife O’Leary at Opportunity Green, said that the country is failing to reach the climate targets it has set as it is not brave enough to ask Aer Lingus and Ryanair to pay taxes.
“Ireland is failing to reach its climate targets purely because it is not brave enough to require Ryanair and Aer Lingus to pay taxes. Aviation is the most carbon-intensive form of transport, and yet Ireland still failed to include aviation in its new Long Term Strategy on climate,” the statement of O’Leary reads.
Concerned about the figures, the European Federation for Transport and Environment said that if the government does not take measures as soon as possible, the tax gap in Ireland is expected to increase by 25 per cent by 2025.
Since traffic is projected to reach 92 per cent of the pre-Coronavirus levels in 2023 and its full recovery by 2025, Transport and Environment also said the tax gap in Ireland could grow to €950 million.
For this reason, Transport and Environment said that taxation should be a top priority for governments.
It has been recommended that the authorities start applying a fuel tax on kerosene, extend the carbon market for aviation to departing flights, and a 20 per cent VAT rate on tickets to tackle the issue.
However, it has been highlighted that with the increase in taxes, passenger ticket prices will increase too. Such a thing could result in a demand decrease as well as in CO2 emissions savings.
“There is a clear opportunity to reduce pollution from aviation and achieve Ireland’s climate goals, all while supporting those most at risk from climate disaster,” O’Leary added.
Moreover, it was suggested that revenues that are raised by taxation should be partly reinvested in green technologies.
