By Krista Hughes
BRUSSELS (Reuters) - Austria's finance minister has clashed with Germany by suggesting airlines could be taxed to fund the EU's budget as well as aid for Africa and other poor regions as Berlin and Paris are suggesting.
Karl-Heinz Grasser raised the idea on the sidelines of talks in Brussels where European Union finance ministers agreed to commission a study into a tax on jet fuel or plane tickets.
Grasser said such a tax would save Austria 200 million euros a year, or 10 percent of its contribution towards the central EU budget. EU member states are in a heated debate over the size of the EU budget that runs from 2007-2013.
"I personally would support such a measure because we have to see how we will finance Europe," Grasser told a news conference.
"I would prefer to finance Europe through a kerosene tax, that the population will not really notice because it goes through plane tickets, than financing Europe through a measure that will really impact on people."
Half of the proceeds from such a tax could fund development aid and the rest the EU budget, Grasser said.
EICHEL INSISTS EUROPE SHOULD HELP DEVELOPING WORLD
German Finance Minister Hans Eichel immediately criticised Grasser's idea.
"That's not my position, I advise against broadening the discussion in this way because that would prevent a result being achieved," he told reporters, defending the idea that Europe could go it alone if other regions refused.
"Europe can and should make a contribution to development policy but it can only do it if it is solidly financed ... you can't always wait for the whole world to join you."
"With the help of this tax we can further development without burdening national budgets," he said.
Grasser said a tax on fuel could raise 18-20 billion euros (12-14 billion pounds) a year based on OECD estimates and a 2002 kerosene usage of some 60 billion litres.
"But we are only at the start of the debate ... the best-case scenario would be for the USA to join as well," he said.
The levy was proposed by French President Jacques Chirac ahead of a meeting of G7 economic powers earlier this month as a way of meeting Europe's promise to raise development aid.
Washington has not and is not expected to support the idea. Within the EU, and a European official said this week Ireland, Spain and most likely Italy would oppose it and that Britain was cool to the idea but unable to say so because it was pushing for aid to Africa as chair of the G8 club of rich nations..
Airlines are worried that a tax could hit them at a time of cut-throat competition from low-cost carriers, not to mention the lingering impact of the September 11, 2001 hijacked airliner attacks in the United States.
Eichel said flights within Europe were cheap.
"When I take a taxi to Berlin airport it is almost more expensive than flying from Berlin to London," he said.
Greek Finance Minister George Alogoskoufis sounded a very cautious note on the tax idea, saying it could hurt tourism.
"The impact should be studied very, very carefully. The study should take into account the impact on countries that depend on tourism," he said.
"We should not be helping the poor countries in the world by taxing the poor countries of Europe. We reserve our judgment on this tax."
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What sort of real impact would there be on ticket prices if we say put 5% tax on jet fuel?