French Plane Ticket Tax To Soar In 2014
02 August 2013
Posted by: Author: Ulrika Lomas
Author: Ulrika Lomas
The French Government has decided to raise the tax imposed on airline tickets by 12.7 percent in 2014, to increase financial aid for development. The decision was taken during the course of a recent meeting in Paris of the inter-ministerial committee for international cooperation and development (CICID).
Dubbed the "Chirac tax," the levy was introduced in France in 2006 by former French President Jacques Chirac. The charge has not been revised since it entered into force. Levied at a rate of EUR1 (USD1.32) on single intra European flights in economy class (EUR10 for business class), up to a rate of EUR40 on international business flights, the product of the tax flows to finance the fight against AIDS, tuberculosis, and malaria in developing countries.
The French civil aviation industry and the National Federation of Commercial Aviation (Fnam) have fiercely criticized the charge from the outset, insisting that the fee merely distorts competition, in particular as regards commercial flights, given that the levy is only applied in France.
Although all airline companies departing from France are subject to the tax, the French airline company Air France-KLM is most affected. Last year, the tax cost Air France-KLM in the region of EUR65m, namely one-third of the total EUR185.3m collected. Air France-KLM's tax bill is expected to soar by a further EUR6m or EUR7m, to over EUR70m, if the tax hike plans are implemented, as the company specializes in business and long-haul flights. The company is already struggling financially and has begun the process of staff restructuring. Around 2,500 jobs are under threat.
The Government is expected to submit plans to increase the "Chirac tax" to parliament by the end of the year. Lawmakers will debate the proposal at the beginning of 2014.