Flying bind

Bloomberg EU Permits markets July 11

Qantas—the airline that will soon call Singapore home (?)—says consumers will foot the entire bill for the un-compensated tax on aviation fuel.

The airline has a better chance to offset the other threat it faces from a European airlines tax. The European emissions permit market is today offering a tonne of carbon at a little more than half the Australian price: about $16.

John Hannoush asks whether the Australian tax liability will also count in Qantas’ favor when the Eurocrats impose their airlines tax. It’s not clear: the two taxes are very different. Labor and the Greens want to tax production of fuel in Australia—presumably to give the airlines an incentive to use “non-polluting” power like…um, batteries? rubber bands?—whereas the EU wants to tax fifteen percent of the CO2 produced by jet-engines flying to or from Europe. The question whether one tax is “equivalent” to the other, and thus merits a Kyoto-style “offset”, may have no answer outside the obscure world of regulatory interest-brokerage.

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