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Increasing German Passenger Tax Could Weaken Economy, IATA Warns

The International Air Transport Association (IATA) has criticized the May 1, 19% increase in German aviation taxes.

germany flag in front of building
Photo by Ingo Joseph on Pexels.com

The raised taxes, now ranging from EUR 15.53 to EUR 70.83 per passenger depending on the route, are likely to hinder the German economy by impacting competitiveness in exports, tourism, and employment. Additionally, this increase could slow down the aviation sector’s recovery from the pandemic and its efforts to decarbonize, with Germany’s international passenger traffic still 20% below pre-pandemic levels.

“When Germany’s economic performance is anemic at best, denting its competitiveness with more taxes on aviation is policy madness. The government should be prioritizing measures to improve Germany’s competitive position and encouraging trade and travel. Instead, they have gone for a short-term cash-grab which can only damage the economy’s long-term growth,” said Willie Walsh, IATA’s Director General. 

Higher Passenger Tax Could Hamper Airline Decarbonization

IATA warns the tax increase on aviation will obstruct the industry’s goal to achieve net-zero CO2 emissions by 2050. This goal heavily relies on the development and use of sustainable aviation fuels (SAF). The German coalition’s original promise to use tax revenues to support SAF production has not been fulfilled. Moreover, the new tax burdens may hinder German airlines’ ability to invest in SAF and other green initiatives. Additionally, the German government seems to support the European Taxation Directive, which proposes further taxes on jet fuel.

“The German government appears to have an unhealthy obsession with aviation taxes. On top of increasing the passenger tax, it is also in favor of a European jet fuel tax which will make it even more expensive to do business in Germany or for families to go on holiday. Our survey of air travelers in Germany shows deep skepticism about government claims for ‘green taxes’. 75% agreed with the statement “Taxation is not the way to make aviation sustainable” and 72% agreed that “Green taxes are just government greenwashing”. Time and again, we see taxation that was supposed to help the industry decarbonize be stolen and then lost in the general budget. And money taken out of the industry means that it has less money to invest in other decarbonization measures,” said Walsh.


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