## Indirect Taxes on International Aviation

_IMF Working Papers, May 1, 2006_

## Source details

**Canonical URL:** [Indirect Taxes on International Aviation](https://www.imf.org/en/publications/wp/issues/2016/12/31/indirect-taxes-on-international-aviation-18941)

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## Bibliographic details
- Authors: Jon Strand, Michael Keen
- Published: May 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451863840.001

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### Summary
- Examines the case for internationally coordinated indirect taxes on aviation as a source of general revenue (not necessarily as a source of development finance).
- Argues the tax burden on international aviation is currently limited, while aviation contributes significantly to border-crossing environmental damage.
- Identifies three tax instruments:
  - 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.
- Recommends deploying both fuel and ticket taxes as optimal policy.

### Quantified Estimates and Scenarios
- A fuel tax of 20 U.S. cents per gallon (10 percent, at today's fuel prices, corresponding to assessed environmental damage) would raise about US$10 billion if imposed worldwide.
- Alternatively, ticket taxes of 2.5 percent would raise about US$10 billion if imposed worldwide.
- If applied only in Europe, either the fuel tax of 20 U.S. cents per gallon (10 percent) or ticket taxes of 2.5 percent would raise about US$3 billion.

### Policy Implications and Practical Considerations
- International coordination strengthens the revenue and environmental rationale for indirect aviation taxes.
- Fuel taxes target environmental externalities most directly; ticket taxes have greater revenue potential; departure taxes encounter fewer legal barriers.
- Optimal design involves a combination of fuel and ticket taxes to balance environmental effectiveness, revenue yield, and legal feasibility.

### Publication and Document Identifiers
- Authors: Jon Strand, Michael Keen
- Date: May 1, 2006
- Series: IMF Working Papers, Working Paper No. 2006/124
- Pages: 58
- Volume: 2006
- Issue: 124
- DOI: https://doi.org/10.5089/9781451863840.001
- Stock No: WPIEA2006124
- ISBN: 9781451863840
- ISSN: 1018-5941

*Indirect Taxes on International Aviation — IMF Working Paper by Jon Strand and Michael Keen (May 1, 2006).*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/indirect-taxes-on-international-aviation-18941_