Tuesday, 11 June 2019

Questions (179, 180)

Pearse Doherty

Question:

179. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be accrued if the excise duty exemption on aviation fuel was ended; and if he will make a statement on the matter. [24215/19]

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Pearse Doherty

Question:

180. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be accrued if the excise duty exemption on aviation fuel was ended with an exception for domestic flights; and if he will make a statement on the matter. [24216/19]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 179 and 180 together.

Ireland's excise duty treatment of fuel used for air navigation is based on European law as set out in Directive 2003/96/EC on the taxation of energy products and electricity, commonly known as the Energy Tax Directive. Under this Directive, Member States are obliged to exempt certain fuels used for commercial aviation purposes from excise duty. The scope of this exemption must include jet fuel (which is the most commonly used heavy oil in air navigation) and must encompass such fuel used for intra-Community and international air transport purposes. A Member State may waive this exemption where it has entered into a bilateral agreement with another Member State to tax fuel for intra-community flights. With regard to fuel for international transport, the scope for a Member State to take a unilateral approach to taxation is limited by international law and a range of bilateral and multilateral agreements that operate under 1944 Convention on International Civil Aviation (known as the Chicago Convention).

Member States may opt to exempt or partially exempt other fuels used for commercial air navigation from excise duty and may also opt to fully or partially exempt fuels used for domestic commercial aviation.

In line with Article 14 of the Energy Tax Directive, Ireland’s Mineral Oil Tax (MOT) legislation, set out in Finance Act 1999, provides for jet fuel used for commercial aviation purposes to be exempted from excise duty. This exemption covers both domestic and international commercial aviation. In addition, Finance Act 1999 provides for a partial relief from excise duty for light oil (aviation gasoline) used for commercial aviation. Again, there is no distinction in national legislation between domestic and international commercial aviation in the operation of the partial relief.

The following table summarises the mandatory exemptions and excise duty measures for aviation fuels required under Article 14 of the Energy Tax Directive. It also summarises the MOT treatment of such fuels used for air navigation as set out in national legislation.

Aviation Fuel/Use

Energy Tax   Directive

Finance Act 1999

Light oil (aviation gasoline) used for domestic commercial aviation

No mandatory tax exemption, Member States may opt to exempt or partially exempt

Partial relief from MOT, effective rate of €355.44 per 1,000 litres (section 97B Finance Act 1999)

Light oil (aviation gasoline) used for   intra-Community/international commercial aviation

No mandatory tax exemption, Member States may opt to   exempt or partially exempt

Partial relief from MOT, effective rate of €355.44 per 1,000 litres    (section 97B Finance Act 1999)

Light oil (aviation gasoline) used for private pleasure flying

Mandatory taxation

Full MOT rate of €587.71 per 1,000 litres (section 96   Finance Act 1999)

Heavy oil (jet fuel) used for domestic commercial aviation

No mandatory tax exemption, Member States may opt to   exempt or partially exempt

Full exemption

(section 100(2)(b) Finance Act 1999)

Heavy oil (jet fuel) used for used for   intra-Community/international commercial aviation

Mandatory tax exemption, except where bilateral arrangement entered into with another Member State

Full exemption

(section 100(2)(b) Finance Act 1999)

Heavy oil (jet fuel) used for private pleasure flying

Mandatory taxation

Full MOT rate of €479.02 per 1,000 litres

(section 100(2)(b) Finance Act 1999)

It is important to note that the tax exemption for heavy oil (jet fuel) used for air navigation for international and intra-Community transport purposes is mandatory, except where a bilateral arrangement to tax fuel for intra-community air navigation is entered into with another Member State. This option has not been taken up by Member States to date as any such bilateral agreement would raise significant legal and competition issues in the event that aircraft operators registered in a non EU country also operated on a route between the Member States which were a party to the bilateral agreement. As such, any material changes to the current tax regime would likely require a major revision of the Energy Tax Directive in order to deliver the necessary legal certainty and to ensure a level playing field between airline operators and between Member States. This would be contingent on developments at international level as the EU regime on taxation of aviation fuels is based on the provisions of the Chicago Convention.

I am advised that consumption data required to estimate revenue that would be accrued if excise duty on aviation fuel was ended is not readily available.  Revenue will examine the issues further and will contact the Deputy directly in that regard.