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Indirect Taxes on International Aviation


  • Jon Strand
  • Michael Keen


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.

Suggested Citation

  • Jon Strand & Michael Keen, 2006. "Indirect Taxes on International Aviation," IMF Working Papers 06/124, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:06/124

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    Cited by:

    1. Bowen, Alex, 2011. "Raising finance to support developing country action: some economic considerations," LSE Research Online Documents on Economics 37572, London School of Economics and Political Science, LSE Library.
    2. repec:gam:jsusta:v:9:y:2017:i:7:p:1247-:d:104856 is not listed on IDEAS
    3. Michael Keen & Ian Parry & Jon Strand, 2013. "Planes, ships and taxes: charging for international aviation and maritime emissions," Economic Policy, CEPR;CES;MSH, vol. 28(76), pages 701-749, October.
    4. Benjamin Jones & Michael Keen & Jon Strand, 2013. "Fiscal implications of climate change," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(1), pages 29-70, February.
    5. repec:eee:touman:v:60:y:2017:i:c:p:442-453 is not listed on IDEAS
    6. Ben Cherniavsky & Benjamin Dachis, 2007. "Excess Baggage: Measuring Air Transportation’s Fiscal Burden," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 242, February.
    7. repec:eee:touman:v:40:y:2014:i:c:p:126-136 is not listed on IDEAS
    8. repec:kap:empiri:v:44:y:2017:i:4:d:10.1007_s10663-017-9381-7 is not listed on IDEAS
    9. Jon Strand, 2008. "Importer and Producer Petroleum Taxation; A Geo-Political Model," IMF Working Papers 08/35, International Monetary Fund.
    10. Schleiniger, Reto, 2016. "Implicit CO2 prices of fossil fuel use in Switzerland," Energy Policy, Elsevier, vol. 96(C), pages 411-420.
    11. Cohen, Maurie J., 2010. "Destination unknown: Pursuing sustainable mobility in the face of rival societal aspirations," Research Policy, Elsevier, vol. 39(4), pages 459-470, May.
    12. Jon Strand, 2007. "Energy Efficiency and Renewable Energy Supply for the G-7 Countries, with Emphasis on Germany," IMF Working Papers 07/299, International Monetary Fund.
    13. Don Fullerton & Andrew Leicester & Stephen Smith, 2008. "Environmental Taxes," NBER Working Papers 14197, National Bureau of Economic Research, Inc.

    More about this item


    Environment; Energy taxes; Indirect taxation; Tax coordination; Transport; aviation taxes; aviation fuel; fuel tax; airlines; airline; air transport; Air Transportation;

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