Sant: green kerosene tax to reduce island’s competitiveness

During a debate in the Economic and Monetary Affairs Committee (ECON), former Prime Minister Alfred Sant urged caution and further thought on the matter of a ‘green kerosene tax’ being suggested as a reform to the energy taxation directive (ETD).

Sant pointed out that a proposal to introduce a levy over ten years on jet fuel would result in a “straight reduction in the economic competitiveness of island and peripheral destinations.”

Sant suggested that instead of a total exemption covering air travel to islands, the solution would be graduating the measures being applied in a different manner over ten years, “so as to safeguard the competitivity of the tourism and other economic sectors of these areas given the disadvantages they carry due to insularity and distance.”

Sant acknowledged that the proposed measures were “important, indeed vital”, but that they had to be “balanced and fair across the board to all the European stakeholders that will be affected by them.”

Sant cited the fact that the proposal would only apply to intra-European Union flights as problematic. “Firstly, this would result in effectively subsiding European and non-European mega airlines. Secondly, this would penalise islands, as well as remote and peripheral regions.”

Sant said that a lot of these economies of these regions were heavily reliant on tourism revenue that airline flights generate, and that this would be most acutely felt in the case of islands where “there exists no road or rail alternatives to tourism travel, as is the case in the major European destinations.”

With the support of other MEPs in the ECON committee, Sant tabled a number of amendments to the directive in line with his points of concern.

The European Union’s Energy Taxation Directive entered into force in 2003. In July 2021, the European Commission presented a proposal for the revision of the Energy Taxation Directive and proposed a new legislation that would tax processes which create greater climate warming. The aim of the proposed directive is to align the taxation of energy products with European energy and climate policies.