Tuesday, 1 October 2019

Ceisteanna (138)

Peadar Tóibín

Ceist:

138. Deputy Peadar Tóibín asked the Minister for Finance the breakdown of taxes that are levied on aviation fuel; and the estimated revenue that would accrue if VAT and excise duty were applied to aviation fuel. [39540/19]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

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).  

VAT is charged on domestic and private usage of jet fuel at the reduced rate of 13.5%, while VAT is charged at the standard rate of 23% on aviation gasoline used for the same purpose.  The supply of aviation fuel for international air travel is zero rated and airline tickets are exempt from VAT throughout the EU.

I am advised that consumption data required to estimate the revenue that could be accrued, if the Excise Duty applied fully to aviation fuel with no exemptions, is not readily available. According to the CSO, the revenue foregone due to the excise exemption on aviation fuel was €494 million in 2016. However, this is a theoretical amount that cannot be realised under the current EU and international legislative framework.       

Finally, I am informed by Revenue that the breakdown of taxes levied on the different types of aviation fuel as provided for under the Finance Act 1999 and Energy Tax Directive are shown in the following table.

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)