American companies currently face the highest corporate tax rate in the world, putting them at a significant disadvantage in the global marketplace at a time when our nation desperately needs companies to create new jobs. But at least the corporate taxes companies are facing are being levied by a body that has the authority to tax them: the United States government. U.S. airline carriers and passengers are now facing an unprecedented tax levied on them in American airspace by a body that has no jurisdiction whatsoever in the United States: the European Union.
As of the first of the year, the E.U. now includes aviation in its so-called E.U. Emissions Trading System. Practically speaking, this means U.S. airlines and passengers will be forced to pay a climate change tax for flights originating in or destined for the E.U. This tax is not just being levied for flight time spent in E.U. airspace, but for time spent in international and U.S. airspace as well. Needless to say, the E.U. has no authority to impose a tax on Americans flying in American or other non-E.U. international airspace. Its attempt to do so is an affront to America’s sovereignty and to international law.
International law as it relates to civil aviation is governed by the Convention on International Civil Aviation (also known as the Chicago Convention), which clearly prohibits the E.U. from unilaterally imposing such a tax. While countries do have the right to impose certain restrictions on airlines flying in their airspace, the E.U. has absolutely no authority to tax a U.S. jet flying over Florida.
To protect America’s sovereignty and ensure that American aviation operators and passengers are not penalized by this tax, I have introduced a bipartisan bill in the U.S. Senate that would provide the secretary of transportation with the authority to ensure U.S. aircraft operators are not penalized or harmed by the E.U.’s emissions scheme. This legislation has bipartisan support within the U.S. Senate, and the U.S. House of Representatives passed a similar bipartisan measure last year. The Obama administration has also objected to the scheme on legal and policy grounds.
The U.S. is far from the only country opposed to the E.U.’s tax. There is widespread opposition around the globe from countries like Russia, India and China, some of which have already prohibited their airlines from participating in the E.U.’s emissions scheme and are contemplating retaliatory measures. European airlines have gotten in on the debate, with aviation companies Airbus, Air France and Safran joining the Association of European Airlines and the International Air Transport Association to warn the E.U. of the negative effects the emissions scheme would have on Europe’s aviation industry.
U.S. airline operators are committed to working with the International Civil Aviation Organization, which was created by the Chicago Convention, on an appropriate emissions regulation system and have spent a lot of their own resources on measures to reduce emissions and fuel consumption, even though they are responsible for less than 2 percent of the world’s annual carbon emissions.
The E.U. tax would cost the American airline industry more than $3.1 billion between 2012 and 2020, money which could otherwise be used for the creation of nearly 40,000 U.S. jobs. The unemployment rate has been at or above 8 percent for 40 consecutive months. We should not be allowing other countries to make it more difficult for American companies to create American jobs.
Today, the U.S. Senate Commerce Committee will hold a hearing on my bill to prevent this illegitimate tax. While there is limited time to act on this important legislation, I remain hopeful that we can prevent this unlawful attack on America’s sovereignty.
Senator John Thune (R-SD) serves as ranking member of the Senate Commerce Committee’s Aviation Operations, Safety, and Security Subcommittee.