Taxing the use of kerosene on flights could bring an additional £6.7bn a year into the Treasury’s pockets, according to research.
A study by NGO Transport & Environment (T&E) published today showed that airlines should be subjected to the same rules as motorists, who pay road fuel unlike carriers.
“The UK is effectively a tax haven for airlines,” said T&E’s UK policy manager Matt Finch.
“Any British motorist paid more fuel duty last time they filled up than British Airlines has ever paid.
“A kerosene tax makes environmental and social sense, in times of climate and economic crisis.”
According to the research, taxing domestic flights – 19 per cent of all UK departures but 4 per cent of total jet fuel – could bring into the government’s pocket £260m per year, while EU flights could contribute an additional £1.93bn.
The Treasury could make up to £1.6bn with services to the US.
The revenue could in turn be invested into the net-zero transition, including the acceleration of sustainable aviation fuels (SAFs).
Made from the likes of solid waste and food scraps, SAFs are considered by many the best way to decarbonise the aviation industry by 2050, as the development and adoption of both hydrogen and electric aircraft is still a few decades away.
“This new government should tax kerosene and use the revenue generated to fund clean aviation,” Finch concluded.
“The absolute priority must be sustainable aviation fuels, specifically e-fuels – which hold the key to green flying in the long run.”
The research comes on the same day aviation minister Baroness Vere said the government still believed focusing on technological developments – and not on curtailing air travel – was the best way forward.
“The government does believe that limits on air travel are not appropriate at this time and, indeed, would be counterproductive for what is one of the most significant sectors in our country and actually very important for the wider economy,” the minister told the House of Lords.
The UK’s Climate Change Committee has advised the government to introduce a VAT on flights or a levy for frequent flyers to help the country get to net-zero.
“I am aware that various proposals are out there for frequent flyers’ levies and actually there are many disadvantages to those sorts of interventions and the government is not considering that at this time,” Baroness Vere added.
City A.M. has approached the Treasury for comment.