Wednesday, November 23, 2005

French cabinet approves poverty airline tax

EU: This is not going to end well for France.

PARIS, Nov 23 (AFP) - The French cabinet approved on Wednesday a plan to tax airline passengers to help pay for health programmes in the world's poorest countries in a scheme which president Jacques Chirac wants to be adopted worldwide. However, other European countries appear lukewarm and the United States is strongly opposed to the proposal. The levy, ranging from one to 40 euros depending on the distance travelled and type of ticket, would be applied on every passenger boarding a flight in France, regardless of the airline. The plan, which still has to be ratified by parliament, has so far won the support of only three other countries -- Britain, Brazil and Chile -- and has been criticised by the airline industry. Germany, which appeared interested at first, has dropped the idea for the time being against a background of the recent election and subsequent political uncertainty and because of concern that the measure might distort competition. Spain has indicated support in principal but has avoided reference to any timetable. ....The French national federation of merchant aviation (FNAM), representing the interests of French air transport companies, has said that the tax arises from "good French sentiments" but has urged the government to calculate the economic effects, suggesting that the measure could cost 3,000 to 4,000 jobs. And an opinion poll in October indicated that 49.0 percent of French people were in favour and 45.0 percent against. Air France chairman Jean-Cyril Spinetta expressed "reservations and reticence" over the plan, and said he regretted he had been unable to persuade the authorities to drop it although he agreed with the objectives. A former president of Air France, Christian Blanc, now a member of parliament associated with the centre-right UDF party which broadly backs the government, said that the proposal was a "very bad idea" and an "illusion" because France would be the only country to apply it. Chirac said on Wednesday that the tax had been worked out so as not to affect the competitive position of French airports or employment in the air industry sector. However, for passengers, the tax would be an additional surcharge over that applied by many airlines themselves to pay for soaring fuel costs.
The only way to keep any sort of competitiveness of French airports and air industry would be to give tax breaks(not likely) or more subsidies which is just playing a shell game.

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