EC tax disaster for flight training
Thread Starter
Join Date: Feb 2006
Location: london
Age: 43
Posts: 72
Likes: 0
Received 0 Likes
on
0 Posts
EC tax disaster for flight training
nice to see the EU killing GA as well as the CAA . GA - the non millionaires need not apply !
From the AOPA :
The European Commission has ordered states to conform to standard tax levels on general aviation fuel in an extraordinary decision which threatens to damage flight training, end alternative fuel research and drive more general aviation companies to the wall.
The EC is demanding that all states impose a minimum of 0.45 euros per litre in tax on avgas and has rejected requests from France, Portugal, the United Kingdom, Malta and Sweden for ‘derogations’ to allow their current tax levels to remain.
The effect in some countries will be dramatic. In Sweden, the price of avgas is expected to almost double, while in Britain – where the cost of flight training is already the highest in the world among countries which have a significant flight training industry – costs will be driven higher and more flight training will be lost to America.
Flying costs are hugely disparate across Europe, and higher taxes will make the situation worse rather than better. In Britain, a student pilot can expect to pay 160,000 euros for an integrated ATPL course with type rating which would allow him or her to apply for an airline job. By contrast, in Germany avgas is heavily taxed and the price of fuel is higher, but the airlines pay for flight training – Lufthansa trains 300 pilots a year at its own expense. In Britain, the aviation industry meets the entire cost of the Civil Aviation Authority, a massive drain on general aviation resources, while in other European countries such ‘services’ are free. And everywhere, conventions on retail margins are vastly different.
In Sweden there is no tax on avgas, partly in recognition of the fact that oil companies there have invested millions of euros to create unleaded and ETBE avgas – a research program which is no longer affordable under the EC’s tax regime. Consumption in Sweden is expected to fall by 50 percent as the retail price, currently around 0.90 euros a litre for unleaded avgas, almost doubles. By convention, the rule of thumb is that a tax increase should be doubled to find where the price will settle. Tax increases reduce consumption while overheads remain the same, and distribution efficiencies disappear. The EC’s tax sledgehammer is particularly inappropriate in the tiny avgas market, where specialist companies provide fuels in pharmaceutical quantities.
Avgas production in Europe equals one quarter of the motor fuel that evaporates from car tanks. Revenues from the additional taxes will be utterly negligible, and as some countries have pointed out, will cost more to collect than they will raise. Portugal sought an exemption on these grounds. Malta cited competition from non-EC countries, to whom we are exporting our flight training industry. The United Kingdom made the same point, while complaining of compliance costs and raising the issue of safety, as users were tempted to forsake avgas for motor fuel. Sweden quoted the requirement for access to remote communities, and the need for affordability in flying to foster currency and therefore safety. The EC, however, brusquely dismissed every request, and failed even to consider those from Denmark and Poland at all.
While the EC’s tax directive describes avgas as being used for “private pleasure flying” its definition is so loosely written that few users will escape. Some GA companies are worried that their national governments will raise taxes beyond the EU minimum, using the EC order as an excuse, and several national AOPAs have scheduled meetings with their governments to try to keep the damage to a minimum.
From the AOPA :
The European Commission has ordered states to conform to standard tax levels on general aviation fuel in an extraordinary decision which threatens to damage flight training, end alternative fuel research and drive more general aviation companies to the wall.
The EC is demanding that all states impose a minimum of 0.45 euros per litre in tax on avgas and has rejected requests from France, Portugal, the United Kingdom, Malta and Sweden for ‘derogations’ to allow their current tax levels to remain.
The effect in some countries will be dramatic. In Sweden, the price of avgas is expected to almost double, while in Britain – where the cost of flight training is already the highest in the world among countries which have a significant flight training industry – costs will be driven higher and more flight training will be lost to America.
Flying costs are hugely disparate across Europe, and higher taxes will make the situation worse rather than better. In Britain, a student pilot can expect to pay 160,000 euros for an integrated ATPL course with type rating which would allow him or her to apply for an airline job. By contrast, in Germany avgas is heavily taxed and the price of fuel is higher, but the airlines pay for flight training – Lufthansa trains 300 pilots a year at its own expense. In Britain, the aviation industry meets the entire cost of the Civil Aviation Authority, a massive drain on general aviation resources, while in other European countries such ‘services’ are free. And everywhere, conventions on retail margins are vastly different.
In Sweden there is no tax on avgas, partly in recognition of the fact that oil companies there have invested millions of euros to create unleaded and ETBE avgas – a research program which is no longer affordable under the EC’s tax regime. Consumption in Sweden is expected to fall by 50 percent as the retail price, currently around 0.90 euros a litre for unleaded avgas, almost doubles. By convention, the rule of thumb is that a tax increase should be doubled to find where the price will settle. Tax increases reduce consumption while overheads remain the same, and distribution efficiencies disappear. The EC’s tax sledgehammer is particularly inappropriate in the tiny avgas market, where specialist companies provide fuels in pharmaceutical quantities.
Avgas production in Europe equals one quarter of the motor fuel that evaporates from car tanks. Revenues from the additional taxes will be utterly negligible, and as some countries have pointed out, will cost more to collect than they will raise. Portugal sought an exemption on these grounds. Malta cited competition from non-EC countries, to whom we are exporting our flight training industry. The United Kingdom made the same point, while complaining of compliance costs and raising the issue of safety, as users were tempted to forsake avgas for motor fuel. Sweden quoted the requirement for access to remote communities, and the need for affordability in flying to foster currency and therefore safety. The EC, however, brusquely dismissed every request, and failed even to consider those from Denmark and Poland at all.
While the EC’s tax directive describes avgas as being used for “private pleasure flying” its definition is so loosely written that few users will escape. Some GA companies are worried that their national governments will raise taxes beyond the EU minimum, using the EC order as an excuse, and several national AOPAs have scheduled meetings with their governments to try to keep the damage to a minimum.
Join Date: Apr 2003
Location: Bordeaux, France
Posts: 581
Likes: 0
Received 0 Likes
on
0 Posts
I do not understand this post...
According to an article in response to the hike in prices over the summer by Total Here :
http://www.total.pt/pt/content/NT0000998E.pdf
70% of the price we pay for Avgas is tax anyway, and at €1.50/Ltr that is a little over 1 Euro, more than 45 cents anyway, so are they talking an extra 45 cents on top of current levels or what?
I dont remember the last time I saw avgas at €0.64/Ltr = £0.45/Ltr.......
Regards, SD..
According to an article in response to the hike in prices over the summer by Total Here :
http://www.total.pt/pt/content/NT0000998E.pdf
70% of the price we pay for Avgas is tax anyway, and at €1.50/Ltr that is a little over 1 Euro, more than 45 cents anyway, so are they talking an extra 45 cents on top of current levels or what?
I dont remember the last time I saw avgas at €0.64/Ltr = £0.45/Ltr.......
Regards, SD..
I think you're misinterpreting the Total article:
Comment se détermine le prix de l’Avgas 100LL à la pompe ?
Trois facteurs sont à l’origine du prix du carburant aviation.
D’abord, le coût de la matière première. L’Avgas 100LL, un produit
de haute technologie, nécessite une matière première beaucoup plus
onéreuse qu’un carburant classique. De plus, ses frais de production sont
relativement élevés en raison des faibles quantités fabriquées.
Deuxième composante du prix : la logistique. Plus le point de livraison
est éloigné du centre de production, plus son coût est important.
La quantité de produit commandée constitue également une variable :
plus la consommation d’un terrain est importante, plus elle rentabilisera
les coûts logistiques.
Enfin – et non le moindre – les taxes.
Elles représentent 70 % du prix final du carburant.
I think 'elles' refers to 'la matière première', 'la logistique' et 'les taxes'. Ensemble.
In the UK at least, tax is no more than about 30% of the price of Avgas ex-VAT, 40% inc VAT.
Comment se détermine le prix de l’Avgas 100LL à la pompe ?
Trois facteurs sont à l’origine du prix du carburant aviation.
D’abord, le coût de la matière première. L’Avgas 100LL, un produit
de haute technologie, nécessite une matière première beaucoup plus
onéreuse qu’un carburant classique. De plus, ses frais de production sont
relativement élevés en raison des faibles quantités fabriquées.
Deuxième composante du prix : la logistique. Plus le point de livraison
est éloigné du centre de production, plus son coût est important.
La quantité de produit commandée constitue également une variable :
plus la consommation d’un terrain est importante, plus elle rentabilisera
les coûts logistiques.
Enfin – et non le moindre – les taxes.
Elles représentent 70 % du prix final du carburant.
I think 'elles' refers to 'la matière première', 'la logistique' et 'les taxes'. Ensemble.
In the UK at least, tax is no more than about 30% of the price of Avgas ex-VAT, 40% inc VAT.
Join Date: Nov 2001
Location: UK
Posts: 939
Likes: 0
Received 0 Likes
on
0 Posts
Avgas in the UK currently carries duty of 28.1p or or 41.6 cents, so to meet the minimum tax it merely needs to go up by 3.4 cents or 2.3 p and hopefully that's what will happen.
It may be that nothing happens for a while since there's no time set for the change and no-one is in any hurry to do it
It may be that nothing happens for a while since there's no time set for the change and no-one is in any hurry to do it
Join Date: Apr 2003
Location: Bordeaux, France
Posts: 581
Likes: 0
Received 0 Likes
on
0 Posts
Bookworm,
Ahh, I see what you mean, thats definitely a possibility (I will check with Mlle SD tomorrow, as she is french) as I have regularly been known to get translations slightly wrong !!
Regards, SD..
Ahh, I see what you mean, thats definitely a possibility (I will check with Mlle SD tomorrow, as she is french) as I have regularly been known to get translations slightly wrong !!
Regards, SD..
Just by the way, it's a fundamental of UK politics that decisions about taxation rest in Britain, and we won't be dictated to by Europe in any issue of taxation.
Hence all the fuss about bringing wine in on the ferry!
So, frankly, it's all just so much hot air (6 months ago BTW, the European parliament said something similar about taxing AVTUR, and nothing happened about that either).
G
Hence all the fuss about bringing wine in on the ferry!
So, frankly, it's all just so much hot air (6 months ago BTW, the European parliament said something similar about taxing AVTUR, and nothing happened about that either).
G
Join Date: Oct 2006
Location: Beechy Bucks
Posts: 55
Likes: 0
Received 0 Likes
on
0 Posts
It may be that this is being forced on the Treasury by the EU and the official line is, apparently, that the British government have lobbied as hard as possible against it......but.......
Call me a cynic, but can you imagine Gordon Brown lobbying very hard against something that will bring him in about half a billion in extra revenue??
Somehow I don't think so
Call me a cynic, but can you imagine Gordon Brown lobbying very hard against something that will bring him in about half a billion in extra revenue??
Somehow I don't think so
Join Date: Oct 2006
Location: Brussels - Twin Comanche PA39 - KA C90B
Age: 51
Posts: 647
Likes: 0
Received 0 Likes
on
0 Posts
It may be that this is being forced on the Treasury by the EU and the official line is, apparently, that the British government have lobbied as hard as possible against it......but.......
Call me a cynic, but can you imagine Gordon Brown lobbying very hard against something that will bring him in about half a billion in extra revenue??
Somehow I don't think so
Call me a cynic, but can you imagine Gordon Brown lobbying very hard against something that will bring him in about half a billion in extra revenue??
Somehow I don't think so
Anyways, where is Europe gonna get the money to pay the farmers anyway these days ?
Death Cruiser Flight Crew
Join Date: Jun 2001
Location: Vaucluse, France.
Posts: 613
Likes: 0
Received 0 Likes
on
0 Posts
"Yet another reason to go diesel powered."
Well, no actually, not if the dream for a pastime away from aeroplanes includes boats with engines. You see, the 'boaties' too have just lost their derogation on Red Diesel!
Oh yes, the glorious EC ... YET AGAIN!
Well, no actually, not if the dream for a pastime away from aeroplanes includes boats with engines. You see, the 'boaties' too have just lost their derogation on Red Diesel!
Oh yes, the glorious EC ... YET AGAIN!
Join Date: Feb 2005
Location: TUOP
Posts: 81
Likes: 0
Received 0 Likes
on
0 Posts
Astonishing as it may sound, JetA1 has been subject to the same derogation as AVGAS. In fact more so, as it has, until now, been totally duty free for private use. Not, I am led to believe, as a result of the Treasury's largesse, but because of the cost and inconvenience of separating and collecting such a pitiable amount, from sales of the stuff that has to remain untaxed by international treaty.
Alas no longer, it would seem, and all of your Rulers spin about UK sovereignty over taxes turns out to be just that.
What happened?
Alas no longer, it would seem, and all of your Rulers spin about UK sovereignty over taxes turns out to be just that.
What happened?
