A question regarding proposed "fuel duty" on on Avtur

[Captain Smithy]

Hi folks

I have a question regarding our Government's (or Dictatorship, depending on how you view it) wishes to impose a "fuel duty" on all aircraft fuelled by Avtur (was reading an article in FTN at my club earlier today).

Forgive me if I'm wrong, however I seem to remember from my Air Law stuff in amongst all the speel about ICAO that in Article 24 of the Chicago Convention it states quite clearly:

"Aircraft flying to, from, or across the territory of a state shall be admitted temporarily free of duty. Fuel, oil, spare parts, regular equipment and aircraft stores retained on board are also exempt from customs duty, inspection fees or similar charges."

So, again forgive me if I'm wrong, but if I'm interpreting this correctly, doesn't this make the UK Govt.'s proposed Avtur Tax ILLEGAL according to ICAO, and indeed international law? Or have I got it all horribly wrong?

Can someone please enlighten me?

Cheers

Smithy

[TheOddOne]

Aircraft flying to, from, or across the territory of a state

Quite right, which is why you can claim a rebate if you do any of the above. Unfortunately, what most of us do is fly 'within', a word absent from your text.

If your flight only takes place within the UK, you're subject to whatever tax the Govt. wishes to levy.

Cheers,
TOO

[BackPacker]

Well, the way I see it is that ICAO only exempts international flights from having to pay duty. With avgas, the situation right now is that you pay duty but can reclaim it (via the infamous HO60 form) for an international flight from the UK, and using other forms/mechanisms if you fly from other countries.

For avtur I believe the situation is going to be broadly similar.

The main reason avtur has been without duty so far, I think, is that 99% or more of it is currently consumed for international flights, so the whole system of adding duty to it and then reclaiming duty would cost more than the duty that the government would legitimately receive.

[Captain Smithy]

Cheers for that TOO & BP. The way I read it was that "within a territory" was covered by/is the same as "across a territory", but I see the difference now. Thanks for clearing that up.

Hopefully the Govt. will see sense and scrap the idea... provided we kick up a big enough stink about it.

[dublinpilot]

I think the important part here is retained on board

In other words, they were already onboard, and remain on board.

It does not cover fuel what wasn't already onboard, and is now being added ;)

The purpose is so that when you arrive into a state, they don't go "How much fuel do you have on board Sir? Ok, you must pay duty of £0.33p per litre on that thank you."

dp

[Squeegee Longtail]

Quote: "The main reason avtur has been without duty so far, I think, is that 99% or more of it is currently consumed for international flights, so the whole system of adding duty to it and then reclaiming duty would cost more than the duty that the government would legitimately receive."

Forgive my ignorance, but what has changed regarding avtur to now make it worth taxing?

(sorry, don't know how to do the quote thing)

[Captain Smithy]

Squeegee, a number of points have made AVTUR worth taxing.

1) Government wasting more money than ever before on load of mince - more money needed.
2) Eco-Nazis badgering Government and industry to "take action" to "save the world".
3) Government needs to be seen "doing something" to keep said Eco-Nazis happy and thus win votes/give Eco-Nazis something to do.
4) Aviation hated now more than ever before by Politicians, NIMBYs, Socialists, Eco-Nazis etc. and all now ganging up collectively on Aviation. Tax is one way to hit Aviation hard.
5) More sub-5.7t aircraft now using AVTUR than previously for flights within UK borders.

Not a rant, but unfortunately the truth. :(

[bookworm]

How about

6) Wanting to have a planet left that our children can live on

?

In 1944, when the Chicago Convention was agreed, anthropogenic climate change was unheard of. You can argue about precise levels of tax and about equity in its application, but the idea that we can go around burning fossil fuels priced at a level that pays no attention to the consequences of their use is unsustainable.

[Captain Smithy]

...And of course, adding an extra 50p/litre onto the price of AVTUR will solve all that. :rolleyes:

[soay]

Of course it will. Doubling the price of Avtur will eliminate the incentive to buy diesel engines for GA.

Hmmm. I wonder if that will lead to more sales of lead polluting old Lycosauri. :ugh:

[BackPacker]

Doubling the price of Avtur will eliminate the incentive to buy diesel engines for GA.

It will definitely reduce the incentive, but even when taxed at approximately the same percentage as avgas, I think the future is still with avtur-burning diesel engines. Three reasons:

- Diesel/avtur has a higher energy content per l/kg than avgas/petrol so you need less of the stuff to go the same distance.
- Avtur benefits greatly from economies of scale, whereas avgas doesn't.
- And even without considering economies of scale, the avgas refinery process is more expensive (due to more exact standards) than avtur refining.

And of course there's the environmental issue: Diesel/avtur has lower CO2 emissions than avgas/petrol and even though avgas is "low lead", it still contains a bit of lead.

Last year we had a club flight to Duxford (Flying Legends). A Diamond DA-40 TDI, a Warrior and an Archer. All fully fueled up before departure. Same flight distance, same flight time, same altitude, three adults each. When we refueled in Duxford we had to pay UKP 146 for the Warrior, UKP 160 for the Archer and UKP 30 for the Diamond. (Yes, no typos there. I just checked the receipts.) Even if avtur gets taxed at ridiculous rates it will still be cheaper.

Squeegee, a number of points have made AVTUR worth taxing.

There's actually one more reason. With the Schengen treaty the Schengen area effectively became one internal market to which traditional tax-exemptions no longer apply. If you fly from one Schengen country to the next you cannot buy tax-free cigarettes or liquor for instance. But the same would apply to any taxes applied to avtur for flights within the Schengen area: cannot be reclaimed anymore. And that would be a massive income boost for the governments involved (not the UK though) if avtur were taxed. Oh, and it would make short-haul flying (within Schengen) more expensive thus less attractive and hopefully benefit "greener" forms of transport (long-distance train), or so the environmentalists hope.

[172driver]

but the idea that we can go around burning fossil fuels priced at a level that pays no attention to the consequences of their use is unsustainable.

As is, unfortunately, the gullibility of those who believe everything the media spout :ugh:

[soay]

As is, unfortunately, the gullibility of those who believe everything the media spout
Have you read what NASA (http://earthobservatory.nasa.gov/Study/GlobalWarmingQandA/), the Scripps Institution of Oceanography (http://aquarium.ucsd.edu/climate/Climate_Change_FAQ/), the Met Office (http://www.metoffice.gov.uk/research/hadleycentre/models/modeldata.html), and all the scientists who contributed to the IPCC Report (http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf) have written about climate change?

Now who's being gullible? :rolleyes:

[soay]

When we refueled in Duxford we had to pay UKP 146 for the Warrior, UKP 160 for the Archer and UKP 30 for the Diamond. (Yes, no typos there. I just checked the receipts.) Even if avtur gets taxed at ridiculous rates it will still be cheaper.
But the Thielert engine probably costs £20,000 more than a Lycosaurus, so you'll have to burn huge quantities of Avtur to break even, when its price is doubled by the new tax.

[IO540]

Tax on avtur will kill off the retrofit diesel market. It is already working on a really stretched business model.

That will leave just new planes which today is just Diamond, more or less.

[bookworm]

There's actually one more reason. With the Schengen treaty the Schengen area effectively became one internal market to which traditional tax-exemptions no longer apply. If you fly from one Schengen country to the next you cannot buy tax-free cigarettes or liquor for instance. But the same would apply to any taxes applied to avtur for flights within the Schengen area: cannot be reclaimed anymore.

I don't think that's related to the Schengen Agreement, which was entirely about border controls. The single market was formed by a number of previous agreements, chiefly the Single European Act of 1986, I think, and implemented in 1992. The point is that while the UK is not a full participant in the Schengen Agreement, it most certainly is a participant in the single market. You can't buy duty-free cigarettes or liquor travelling to and from the UK within the EU.

UK duty law was changed in 1992 so that exports of fuel to the EU no longer attracted duty relief. However, relief for fuel "shipped as stores" aboard an aircraft on an international flight was retained, wherever the destination. There may be a difference in the way that EU member states interpret and deal with the conflict between the Chicago Convention and the EU tax requirements. Drawback on Avgas post-1992 always seemed rather anomalous, but one doesn't look a gift horse in the mouth.

[Zulu Alpha]

In 1944, when the Chicago Convention was agreed, anthropogenic climate change was unheard of. You can argue about precise levels of tax and about equity in its application, but the idea that we can go around burning fossil fuels priced at a level that pays no attention to the consequences of their use is unsustainable.


I don't have any issue with us all using energy more efficiently. Where I have a problem is with the idea that more tax helps this. If the tax revenue was spent on insulation grants and double glazing grants etc then I could perhaps be persuaded. However, this is just not the case. As we change to becoming a net oil importing country, then we should be aware of the financial implications of using oil wastefully and be developing ways of using it more efficiently, such as Avtur burning engines for light aircraft.

The increases in fuel taxes are really needed by the government to support its huge expenditures, I think the green lobby is just a smokescreen for them to hide behind.

The recent budget had a good example of this. For 'green' reasons there was to be a 2p increase in fuel duty In the budget the 2p car fuel duty increase was postponed until September. Over the past 6 months the price of fuel has risen by 15p. The VAT on this increase is more than 2p. The government has therefore already increased the price by 2p, so why is there any need for a further 2p duty increase. It should have been cancelled not postponed.

If you visit the UAE, the fuel there is about 20-25% of the price it is here, why are they not taxing it to help reduce its use?

[BackPacker]

Bookworm, you're right. Of course it wasn't the Schengen treaty but something that was implemented earlier than that. It was late, and I was thinking about the situation at Schiphol airport, which is divided in non-Schengen and Schengen, with most (if not all) tax-free shops located in the non-Schengen area. My fault.

One of the problems in the application of the ICAO rules is of course the definition of what is a state. Particularly where individual states are forming combinations of some sort to implement common laws and things.

With a bit of fancy reasoning I think you could argue that a flight between England and Schotland is an "international" flight. I mean, if they are considered separate for things like world cup tournaments, why not for the Chicago convention?

[Captain Smithy]

There is one final point to consider here, which has just sprung to mind.

Considering Aviation's small contribution to CO2 emissions (1.6% of the UK's total CO2 emissions, or thereabouts, I think), and further considering GA's (i.e. aircraft below 5.7t, the target of this Tax) literally tiny contribution to this 1.6%, one wonders how effective this "green" tax will actually be towards making Britain "greener".

Ignoring the whole Climate Change debate for a minute (since there is a thread about that on Jet Blast which has been running Ad Nauseum for what seems like eons), punishing a minority contributor (Aviation) whilst ignoring much bigger contributors (e.g. industry and road transport) is stupid and unnecissary to say the least. Of course we then get the old "Ah, but Aviation's CO2 emissions are forcast to grow to X by the year 20xx" nonsense. Aviation will still be a minority contributor. And it shall also remain a cash cow, for Governments and Environmentalists to milk dry.

[bookworm]

whilst ignoring much bigger contributors (e.g. industry and road transport)

"Ignoring"? If you call a duty of 52p/litre on unleaded petrol "ignoring", what would you expect if the government were pating attention?

You seem to be making the argument that because something has a small contibution to the aggregate it shouldn't be taxed. My own carbon emissions are less than one 50 millionth of the aggregate UK emissions. By your argument, shouldn't I personally be exempted from duty on petrol and avgas because my contributions are tiny?

[Captain Smithy]

I am against any form of "Environmental" Taxation, principally because it does nothing to help the problem... if the problem is indeed existant.

As Zulu Alpha stated, if all "Environmental" Tax collected was to be placed into a ring-fenced fund to help with development of Environmentally-friendly new fuels, transport systems, technologies etc. then I'd be happy to pay EcoTax. However instead the money is going straight to the Treasury, and will no doubt help MPs buy expensive tellys from John Lewis, get chucked at scrounging wasters and other nonsense.

On the other hand, if all this Climate Change malarky turns out to be a load of old mince, then the whole exercise is not only pointless, but it means that we have all been robbed.

So, Bookworm... I presume you are a pilot... if you operated an AVTUR-fuelled machine (or perhaps you do), would you be willing to see your costs rise substantially above what they currently are? What would this do to flying clubs/schools operating AVTUR-fuelled aircraft? What would this do to the GA industry (air taxis, Biz Jets, small TPs etc., mostly AVTUR-burners) as a whole?

[al446]

Captain Smithy wrote-

4) Aviation hated now more than ever before by Politicians, NIMBYs, Socialists, Eco-Nazis etc. and all now ganging up collectively on Aviation. Tax is one way to hit Aviation hard.

I consider myself to be a socialist with a love of aviation so please leave us out of this equation.

Sorry, I too don't know how to do the quote thingy.

Cheers

[bookworm]

So, Bookworm... I presume you are a pilot... if you operated an AVTUR-fuelled machine (or perhaps you do), would you be willing to see your costs rise substantially above what they currently are?

Willingness doesn't really come into taxation issues. Fairness does. You've probably guessed I fly an AvGas burner, haven't you. ;)

Even if you and Zulu Alpha don't like it, taxation is a well established method of regulating demand for a resource for which there are adverse consequences to overconsumption. Pricing of fuel, whether influenced by taxation or carbon credits and offsetting, has a significant role to play in reduction of carbon emissions. If the GA industry needs support, the government should support it directly, not by keeping the marginal costs of turning fuel into carbon dioxide inequitably low.

[D SQDRN 97th IOTC]

UK Govt does not want to impose excise duty on Avtur. It is being forced to, however, by the EU commission after its request for a derogation to impose minimum taxation levels on certain petroleum fuels, like Avtur, was denied.
Council Directive restructuring the Community framework for the taxation of energy products and electricity 2003/96/EC is the relevant EU directive that UK Govt must comply with by November this year.

Will it be a net cost to the Govt to impose this? Probably.
Does taxation regulate demand? Only partially.
Has Schengen got anything to do with taxes? Don't make me laugh.

[Zulu Alpha]

Even if you and Zulu Alpha don't like it, taxation is a well established method of regulating demand for a resource for which there are adverse consequences to overconsumption. Pricing of fuel, whether influenced by taxation or carbon credits and offsetting, has a significant role to play in reduction of carbon emissions.

If taxation is being used to increase the price in order to regulate consumption, then why do we need a 2p duty increase when the price has already gone up by 15p due to the price of crude? This is the flaw in the current argument. Even if the government say they need the 2p for budgetary reasons, they already collect 2p more VAT on the increased price.
I can only put it down to opportunism hiding behind the green lobby.

ZA

[D SQDRN 97th IOTC]

there are certainly some taxes being dubiously levied in the name of being "green", but which governments, including the UK's, have no intention on spending solely on green projects.

[Squeegee Longtail]

To all the eco-warriors on this thread - take a balanced view of the world and see who contributes most to co2 emissions. It is not the man on the street with his car / airplane / lawnmower / boat, but the industries which fuel constant corporate and national expansion.
When will the world stop and realise that if the human race stopped expanding, and started to live within the constraints of the planet, then things will take care of themselves (and I could fly more cheaply).

Reduce the population = reduced consumption, CO2, airways congestion etc etc.

ONE CHILD PER FAMILY!!

Squeegee Longtail (Father of two)