Tuesday, April 7, 2009

Goodbye to the Dutch Ticket Tax

The International Air Transport Association (IATA) expressed approval recently over the Dutch Government's decision to eliminate its controversial tax which imposed a cost of between euro 11.25 to 45 for every passenger departing from its airports.  According to IATA Director General and CEO Giovanni Bisignani, "The tax was a [euro] 312 million competitive disadvantage for the Dutch economy. . . . [Abolishing the tax] will provide an economic boost in [the current economic] crisis and help build a competitive future" for the Netherlands.

While the abolition of the tax is certainly a welcomed development, its legality was in question from the beginning.  In a guest post from February 2008, Dutch aviation lawyer Frans Vreede scrutinized the tax in light of both Article 15 of the Chicago Convention and the recent U.S/EC Air Transport Agreement.  In Vreede's view, "the intention of Article 15 is not simply to act against discriminatory fees, but to altogether ban the setting of fees which have nothing to do with the use of airports and airport facilities."  Given that the Dutch tax was--in Vreede's words--"a flat tax aiming to top up the exchequer by €350 million ($518 million) per year," it was inconsistent with the Chicago Convention.  Despite this observation, the tax survived court challenges in the Netherlands and only fell after KLM and the Schiphol Group spearheaded a lobbying campaign against it.  Unfortunately, what this means is that the tax or one like it could reappear once the economic climate improves.

Blog readers interested in a concise analysis of the legal challenges to the tax should read Prof. Brian F. Havel and Niels van Antwerpen's The Dutch Ticket Tax and Article 15 of the Chicago Convention, 34 Air & Space Law 141 (2009).  (A link will be posted on the blog upon availability.)  With the temptation to tax civil aviation an persistent threat and the European Community committed to still bringing aviation into its emissions trading scheme, the legal issues addressed in the piece remain as timely as ever. 


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