EU air fuel tax hits Irish rocks

PLANS to introduce a new tax on jet fuel lie in disarray, even as European member states work to help the environment.

European finance ministers will later this week discuss whether jet fuel should be subject to new environmental taxes. But new EU tax measures can only be implemented by unanimous approval of all member states. Ireland, concerned about the healkth of its airline businesses, remains opposed to the idea of a tax on air fuel.

The Kyoto Protocol aimed at cutting emissions of 'greenhouse gases' takes effect today and there has been growing interest in imposing new taxes on airline fuel. But Europe is unlikely to go it alone because its airlines will be put at a huge competitive disadvantage compared with non-EU rivals.

Meanwhile, European Transport Commissioner Jacques Barrot voiced opposition to the idea of a tax on jet fuel even though the Commission has yet to study the idea. Barrot said such a tax would not lead to a reduction in carbon dioxide emissions, adding: 'I would be reluctant to introduce a tax on jet fuel today for European air companies.'

Barrot's position reflects disagreement within the Commission. The commissioner in charge of tax policy said on Monday that he thought EU finance ministers would probably give 'unanmimous backing' to the move.

Laszlo Kovacs, however, warned against the EU going it alone with such a tax without first seeking broader international support, since such duties could damage the competitive position of European airlines.

The Commission has said that a fuel duty on aircraft would be dedicated to funding development aid ? a move which few European politicians will feel able to argue against.

The UK, France, Germany and Italy agreed on the concept at a recent meeting of G7 ministers focused on helping Africa. Kovacs said that the real question would be whether the EU could get agreement with the US on imposing a tax, something many see as distinctly unlikely given America's opposition to the Kyoto Treaty on climate change ? which came into force in its signatory countries.

Kovacs added: 'If we introduce a tax on the scale of the European Union it can result in a deterioration in competitiveness for the EU countries' airlines,' Kovacs said.

Germany's Der Spiegel magazine reported on Sunday that experts were recommending a tax of 300 euros per tonne of fuel, which it said would add between 5-10 euros (£3-7) on the price of airline tickets in the EU.

The Kyoto Protocol imposes limits on emissions of carbon dioxide and other gases scientists blame for rising world temperatures, melting glaciers and rising oceans. Ratified by 140 nations, it imposes varying requirements ? countries have to reduce emissions by an average 5.2% by 2012.

The UK is committed to cutting its emissions by 12.5% below 1990 levels by 2012 and the European Union to an 8% reduction on 1990 levels by 2012. The US agreed to a 7% reduction before President George Bush denounced the pact in 2001.

The US, the world's largest emitter of so-called greenhouse gases, has refused to ratify the agreement, saying it would harm the economy and is flawed by the lack of restrictions on emissions by emerging economies China and India.