Legal Lunacy

By Global Tax Weekly

“The law is an ass” we say in English when the strictly correct application of legal principles by a court leads to a result that any normal right-thinking person would think is absurd; and the German Constitutional Court has just brayed very loudly in saying that the country’s air travel ticket tax does not offend against the constitutional rights of citizens or the airlines. Maybe so, but it and the Court offend against common sense. All taxes are an offence against citizens’ rights when the government that levies them spends the money it collects in a wasteful and unprincipled fashion by providing bread and circuses to voters in order to stay in power, and by that definition most of the money Germany collects is unconstitutional, as is the case in virtually all “advanced” democracies. Well, I won’t mount that particular hobby-horse today (next week, promise) but will stay focused on the insanity of a tax which purports to benefit the environment but is an anti-consumer and counter-productive money-grab. As to the environment, which is none of government’s business, you won’t be surprised to hear me say, study after study has shown that the only environmentally effective way of taxing air travel is to charge by the plane-load, which relates cost to CO2 creation. To give a rare bouquet to the European Union, that is exactly what it tried to do with its Emissions Trading Scheme, which was shot down by an unholy alliance between airlines and competing countries, including the US in particular. The ETS is now in limbo, but a number of individual European countries are feeding at the air travel ticket tax trough. In almost every case, they charge more for longer flights, roughly in proportion to distance travelled, which makes less sense than you might think, given that short flights are far more polluting per kilometre than long ones. Their rationale of course is to keep the tax roughly proportional to ticket cost, but it doesn’t work because of the ever-cheaper low-cost airlines. It’s everyone’s experience by now that the taxes on a ticket are often greater than the travel cost, and it’s this that hurts airlines and airports near borders with lower-tax countries. In Germany’s case, it is surrounded by such, in particular the Netherlands and Belgium, which abandoned their own ticket tax systems when they saw passengers deserting their airlines in droves. The German state of Rhineland-Palatinate, which borders Belgium, and is a short drive away from the Netherlands, brought the case, and has been rebuffed. The UK, which has the highest ticket tax in the EU, at least has the excuse that it’s surrounded by water. But in the end there is no excuse for this damaging and hurtful tax.

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