Transport costs Europe €1 trillion in pollution and congestion – and citizens, not polluters, pay the price

By assessing transport’s external costs, the report will inform all future EU policies to tackle the sector’s pollution. It finds that trucks, ships and aviation are undertaxed – airlines are exempt from fuel taxes and VAT, and trucks enjoy generous diesel tax discounts – and that transport’s external costs are now equivalent to 7% of EU GDP.

William Todts, executive director at T&E, said: “European transport pollution, congestion and noise are costing us a trillion a year. But these costs aren’t inevitable and can and must be radically reduced. A big part of the answer is to make polluters, not average citizens, pay. The key to success for a green tax shift is fairness, and the best way to get popular buy-in for things like fuel or kerosene taxes is to give the money back to people by cutting their income taxes at the same time.”

The report highlights that while airlines and their passengers just about cover the aviation sector’s infrastructure costs in Europe, they pay only a small amount of the environmental costs of flying. T&E said that introducing VAT, kerosene taxes and ticket taxes, and further strengthening the EU ETS, were all ways of making the polluters, rather than citizens, pay.

Aviation ticket taxes are currently being considered by a number of European governments and a new report shows they have several options to introduce greener ticket taxes. Last year 17 distinguished economists, including former Italian prime minister Enrico Letta and ex-WTO head Pascal Lamy, called for VAT to be levied on airline tickets and a tax on aviation kerosene to be introduced.