Indirect Taxes on International Aviation

May 1, 2006

Preview Citation

Format: Chicago

Jon Strand, and Michael Keen. Indirect Taxes on International Aviation, (USA: International Monetary Fund, 2006) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Aviation, Fuel tax, Public expenditure review, Transportation, Value-added tax

Keywords: Aviation fuel, Indirect tax, Ticket tax, WP

Publication Details

Pages:

58
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/124
Stock No:

WPIEA2006124
ISBN:

9781451863840
ISSN:

1018-5941

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