Monday, October 20, 2008
The International Air Transport Association issued a strong statement last week against Ireland and Belgium's plans to impose departure taxes as a means of shoring up national budgets impacted by the current global financial crisis. The IATA statement noted that the price of these tax proposals, when combined with the current departure charges instituted by the United Kingdom and the Netherlands, could cost consumers 3.8 billion euro by 2010.
If the taxes are passed into law, it is likely both will face court battles similar to the one still pending against the Dutch tax which went into effect last July. The critical question for the courts to answer is whether these taxes violate the Chicago Convention's Article 15 prohibition on charges imposed by contracting States solely for the right of entry, exit, or transit over their territory. This article has been read as not merely a prohibition on discriminatory fees, but as a bar to States imposing charges on civil aviation which are unrelated to the use of airports or their facilities. Given the fact Ireland and Belgium's proposals serve no other purpose than to raise lost revenue at the expense of civil aviation, their incompatibility with Article 15 seems apparent. Whether the national courts agree is another matter. The aforementioned Dutch tax has already survived two lower court rulings. On the other hand, a 2005 ruling by the Administrative High Court of Belgium nullifying a tax imposed on all flights into Brussels National Airport relied specifically on Article 15. What (if any) persuasive value that case holds remains to be seen.