Taxing aviation sector won't pay, says expert

“While taxes provide a tangible short-term revenue boost to the government coffers, increased taxes in the long-term can be outweighed by the cost to the underlying economy,” said aviation finance specialist Charles Tyler.

“Germany, India and Austria are not claiming their taxes are environmental. They are simply a financial grab on behalf of the respective governments,” he said in the latest issue of IATA journal Airlines International. Tyler said India has been increasing its taxes on air tickets, which is negatively affecting the Indian civil aviation industry.

“Despite campaigns that stated that the tax contravenes International Civil Aviation Organisation policies, the Indian Finance Ministry extended airline taxes to all classes of domestic and international airline tickets,” he said adding earlier such a tax was levied only on premium class international tickets. “These taxes were capped, but the Indian finance ministry is seeking to remove these upper limits thus increasing the taxes further,” he said.