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IATA chief attacks South African government over proposals to introduce carbon tax on aviation from 2012

IATA chief attacks South African government over proposals to introduce carbon tax on aviation from 2012 | South Africa

(photo: Airbus)

Mon 9 May 2011 – IATA Director General and CEO Giovanni Bisignani has strongly criticised proposals by the South African government to introduce a carbon tax in 2012 that would include aviation. Speaking on a visit to the country, he said South Africa’s opposition to Europe’s “illegal” inclusion of aviation in its emissions trading scheme from next year had been “absolutely correct” and he therefore found it hard to understand why the government was now considering its own unilateral carbon tax scheme. “This must be stopped,” he demanded. The South African National Treasury is still mulling the impact of the tax and plans to finalise details mid-year and publish a tax policy paper for stakeholder review by November, with a formal announcement expected in its February 2012 budget speech.

 

As the host of the COP 17 climate talks later this year, Bisignani said South Africa must show leadership in achieving a global approach on mitigating climate change, and taxing aviation was a step in the wrong direction.

 

A month ago, he wrote an open letter to the South African Minister of Transport saying the tax would have major ramifications for the aviation sector as well as other sectors that relied heavily on air transport, including tourism and trade. He said South Africa relied extensively on long-haul flights from key international tourism destinations. “A carbon tax would put in jeopardy the very substantial benefits delivered to South Africa’s society and economy, which is not what the sector needs, nor what the travelling public wants,” he wrote.

 

He reminded the minister that South Africa was one of the 190 Contracting States called upon by the International Civil Aviation Organisation (ICAO) to eliminate ‘all forms of taxation on the sale or use of international transport by air’, including taxes levied on passengers.

 

“The Treasury’s proposals are doing exactly the opposite,” he stated. “In any case, Article 24 of the Chicago Convention, to which South Africa is a signatory, stipulates that a fuel tax can only apply to fuel used on domestic air services whereas fuels used for international operations must be tax-exempt.”

 

He said solutions to climate change should be made at a global level and invited the government to join the industry in developing an appropriate global framework through ICAO, “rather than unilateral, punitive and ineffective measures at national level”.

 

Bisignani’s call was supported by the Airlines Association of Southern Africa, whose CEO, Chris Zweigenthall, said: “Regional or country solutions will just lead to a proliferation of taxes and there is no guarantee that they will be channelled in the direction for which they are intended. A passenger could theoretically get charged twice on one flight by two separate states.”

 

He said no government assurances had been given that the carbon tax revenues would be used for environmental purposes. “Treasury has advised that they are not in favour of ring-fencing this revenue and it will be allocated in the normal budget process. It is certainly a concern for all of us.”

 

The Treasury’s Deputy Director General, Ismail Momoniat, recently told industry leaders at a conference that the proposed tax was one of the instruments the government planned to use “to change people’s behaviour” to combat the problem of climate change. “We cannot sit back and do nothing – any delay will have serious consequences for the future,” he said.

 

The government is considering a tax based on a price per tonne of carbon emissions and the tax could be in place by July next year, say reports.

 

Emitting some 500 million tonnes of carbon dioxide equivalents (CO2e) yearly, South Africa ranks among the world’s 20 biggest emitters of greenhouses gases, and third when measured on a total emissions per capita basis. During the 2009 Copenhagen climate summit, the country voluntarily announced that it would move to reduce domestic GHG emissions by 34% by 2020 and by 42% by 2025 from a ‘business as usual’ baseline, subject to the availability of adequate financial, technological and other support

 

Links:

IATA – letter from CEO to South Africa’s Minister of Transport

Airlines Association of Southern Africa



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Member Opinions:
By: ChrisLyle on 5/11/11
Without prejudice to IATA's position on a carbon tax...

IATA is misstating Article 24 of the Chicago Convention, which has legal force but applies only to fuel brought in to the territory of a State and retained on board on leaving that territory. It does NOT apply to fuel taken on board in the territory.

On "all forms of taxation" ICAO's policies are non-binding and also somewhat wishy-washy: "each Contracting State shall reduce to the fuillest practicable extent and make plans to eliminate as soon as its economic conditiosn permit all forms of taxation on the sale or use of international transport by air".


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