The skies over Europe just became less friendly. Statists and environmentalists on the Continent have linked up to impose a new carbon-dioxide-emissions tax on flights to and from Europe. This heightens prospects for a trade war that could prolong economic stagnation the world over.
The European Union’s “cap-and-trade” tax, which took effect Jan. 1, charges international airlines for their carbon-dioxide emissions, including mileage logged outside of European airspace. Of course, those carriers are already struggling financially and will have no choice but to pass along the extra cost to fliers. It will add an average of $30 to a round-trip ticket. U.S. airlines have estimated the new tax will cost them at least $3.1 billion by 2020, and travelers worldwide are expected to pay an additional $22.9 billion over the same period, gobbling up a sizable portion of airline profits.
In September, the Obama administration was joined by China, Russia, India, Brazil and 21 other countries in opposing the tax. They contended the measure violates the Open Skies Agreement, in which nations grant each other access to their airspace in promoting free trade. The EU’s Court of Justice dismissed their complaint in December, allowing the tax to take effect.
The new carbon-dioxide tax presents a clear example of why the Old World’s economy is failing. Socialist policies held over from the 20th century have accustomed Europeans to generous entitlements from their governments with little regard for the cost. Combine big spending with the resulting high taxes and low productivity, and you have once-strong nations staring at the very real prospect of bankruptcy. Last month, the International Air Transport Association warned that the eurozone crisis could, under the worst scenario, drag the aviation industry $8 billion into the red.
Imposing another tax on air carriers under such circumstances just makes matters worse - and that’s what European leftists seem to want. The carbon-dioxide levy is part of an ongoing radical campaign to force the deindustrialization of the Continent. Yet the move has consequences far beyond Europe.
Wars, whether on the battlefield or in the marketplace, often begin as skirmishes, and the EU’s carbon-dioxide tax could prove to be an act that triggers larger trade hostilities worldwide. Secretary of State Hillary Rodham Clinton and Transportation Secretary Ray LaHood threatened “appropriate action,” such as a retaliatory tax on European airlines, if the new charge took effect. Likewise, China demonstrated its displeasure by threatening to cancel an order placed by Hong Kong Airlines for Europe’s Airbus aircraft, worth billions of euros.
Big-government Eurocrats need to learn that taxing foreign travelers won’t save them from an economic collapse of their own making. Soaring airline-ticket prices likely will result in a drop-off of fliers, negating the intended effect of the levy. Rather than scanning the skies for victims for their tax schemes, Europeans need to look in the mirror and admit that their own profligate spending habits have rendered them euroless. The sooner they learn to live within their means the better.
The Washington Times