On Nov. 6, 2013, French lawmakers voted a 12.7% increase of the 'Solidarity tax' on airline tickets.
Starting from April 1st, 2014, airlines companies will apply the solidarity tax to airline tickets as follows:
Flights within Europe or domestic flights(France is the only country applying this tax on domestic flights):
- 1.13 euro for each flight ticket (a return flight being 2 tickets) in economic class,
- 11.27 euros in business / first class for flights (there is no business or first class for domestic flights)
International flights (outside Europe)
- 4.51 euros for economic class in international flight
- 45.07 Euros for business / first classes.
The expected annual net revenue after this increase is estimated to be 185 to 203 million Euros.
A painless tax, for who?
Airline companies do not charge everything to their passengers so that they can stay competitive. Air France will be the most affected by the increase of the 'solidarity tax' as they are bringing one third of the money collected. In the end, we don't really know what they pay and what passengers pay.
It is clear that any tax increase is not popular, and particularly in France, but before starting a riot, let's get more informed about that 'Solidarity tax' and let's see whether we have reasons to reject it or to be proud of it. Because in the end, the main question is actually 'who is benefiting?': people who really need it or people who just need to maintain or improve their lifestyle?
The 'solidarity tax' (also called 'Chirac tax') was introduced in France in 2006. It is paid by passengers when purchasing their tickets, normally as an addition to existing airport taxes. Passengers in transit are exempted.
This 'Chirac tax' is actually a form of innovative financing for development, the notion of which was introduced into international debates at the Monterrey Summit in 2002. In 2004, two reports were released which assessed the potential of “innovative financing mechanisms” to address global inequality, particularly in the areas of health and hunger. The first report from Action against Hunger and Poverty, was released by its Technical Group on Innovative Financing Mechanisms in September 2004. The Technical Group had formed in support of the 2004 Geneva declaration, led by Brazil, Chile, France, and Spain, which urged full implementation of financial commitments to meet the Millennium Development Goals. The second report was commissioned by French President Jacques Chirac in November 2003, and was publicly released in December 2004. Known as the Landau Report, the report considered the feasibility and desirability of a prosperity tax on the rich to fight poverty and inequality.
Following the release of the two reports, support gradually increased for the implementation of such initiatives, particularly among the countries which had been involved from the outset, and most notably in France and Brazil. In February 2005, Brazil, Chile, France, Germany and Spain released a joint statement endorsing innovative approaches to development financing, noting that a pilot project to tax air travel was currently under consideration.
In 2006, the Leading Group on Innovative Financing was founded after the Paris Ministerial Conference on Innovative Development Financing Mechanisms. Its action stems from the joint Declaration by Presidents Chirac (France) and Lula (Brazil) against hunger and poverty at the United Nations in September 2004. Since then, it has become a leading international forum for discussions on innovative development financing mechanisms. The Leading Group on Innovative Financing brings together 65 countries, various international institutions, foundations, and non-governmental organizations. Its Presidency rotates every six months. Nigeria holds the Presidency for 2013.
Three major initiatives have already been implemented through the Leading Group: the UNITAID drug purchase facility and the massive International Financing Facility for Immunisation (IFFIm), which both started in 2006, and the Advanced Market Commitment (AMC) for pneumococcal vaccines.
UNITAID’s mission, which has remained constant over the years, is to secure a long-term and predictable stream of funding to increase access to treatment for HIV/AIDS, TB and malaria for people in developing countries by leveraging price reductions of quality drugs and diagnostics, which currently are unaffordable for most developing countries, and to accelerate the pace at which they are made available.
UNITAID receives its funds through airline ticket taxes (approx. half of its finances) or regular budget contributions from its members. As of today, 29 countries are members of UNITAID, as well as one foundation, The Bill & Melinda Gates Foundation. The majority of UNITAID's member countries are African. Countries implementing the airline tax include Chile, France, Madagascar, Mauritius, Niger and the Republic of Korea. Norway allocates part of its tax on carbon dioxide emissions from air travel to UNITAID. France is the main contributor to the fund (60 to 70% of the total revenues of UNITAID, according to different sources).
For passengers, the cost of the tax on airline tickets is described as very low, and even painless, compared with the total cost of a ticket. Different rates are set according to a country's level of development and there is an extra option to vary the charge according to the distance traveled. For example, some countries in Africa have chosen to impose the levy only on international flights or on business and first-class tickets.
The Secretariat of UNITAID is based in Based in Geneva and is hosted by the World Health Organization. On June 6 2013, the UNITAID Executive Board re-elected Dr Philippe Douste-Blazy as Board Chair for a three-year term. Dr Douste-Blazy is also Special Advisor to the Secretary General of the UN in charge of Innovative Financing for Development.
UNITAID has already committed more than 500 million dollars in 80 recipient countries, which are primarily low-income countries. France appears to be the main contributors of UNITAID funds while other members tend to allocate the money collected trough their levies on airline tickets to other initiatives.
In the end, UNITAID has often been praised for its innovative approach but it has also received many critics for its lack of effectiveness and sometimes transparency. However, some independent assessment has been carried out (UNITAID Five-year evaluation report), which tend to demonstrate that the initiative is sustainable and valuable, though there is always room for improvement.
Personally, I think France should not be blamed for having initiated this, on the contrary, because inequalities are unfair, and it is everybody's duty to remove them. In my case, I have no reason to complain about the solidarity tax. First, the idea of contributing personally to the reduction of poverty and inequalities does not shock me, on the contrary. If I have enough money to travel by air, then I should have enough money to pay for the Chirac tax. And whenever I travel for business purpose (in economic class ...), I expect my company to pay for the tax without complaining, as it does for any other taxes. But then again, all taxpayers should be aware of what they pay and for what purpose. And anyone has the right to be upset when those taxes, as small and painless as they are, are used to cover extravagant expenditures.
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