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Indirect Taxes on International Aviation

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Author Info
Jon Strand
Michael Keen

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Abstract

This paper examines the case for internationally coordinated indirect taxes on aviation (as a source of general revenue-not (necessarily) as a source of development finance). The case for such taxes is strong: the tax burden on international aviation is currently limited, yet it contributes significantly to border-crossing environmental damage. A tax on aviation fuel would address the key border-crossing externalities most directly; a ticket tax could raise more revenue; departure taxes face the least legal obstacles. Optimal policy requires deploying both fuel and ticket taxes. A fuel tax of 20 U.S. cents per gallon (10 percent, at today's fuel prices, corresponding to assessed environmental damage), or alternatively ticket taxes of 2.5 percent, would raise about US$10 billion if imposed worldwide, and US$3 billion if applied only in Europe.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/124.

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Length: 58 pages
Date of creation: 23 May 2006
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Handle: RePEc:imf:imfwpa:06/124

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Related research
Keywords: Indirect taxation ; Energy taxes ; Transport ; Environment ;

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jon Strand, 2008. "Energy Efficiency and Renewable Energy Supply for the G-7 Countries, With Emphasis on Germany," IMF Working Papers 07/299, International Monetary Fund. [Downloadable!]
  2. Jon Strand, 2008. "Importer and Producer Petroleum Taxation: A Geo-Political Model," IMF Working Papers 08/35, International Monetary Fund. [Downloadable!]
  3. Don Fullerton & Andrew Leicester & Stephen Smith, 2008. "Environmental Taxes," NBER Working Papers 14197, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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