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SAS rejects memorandum on new flight tax

January 27, 2006 12:43

SAS completely rejects the Swedish Ministry of Finance’s memorandum Fi 2005/6480 on an environment tax on air travel. The airline’s objections include: Inadequate analysis by the Ministry of the tax’s effects, an unclear legal basis for the tax and an obvious risk of distortion in the competition between various modes of transport. Instead, SAS recommends that air travel be included in the EU’s trading system for emission rights to reduce the airlines’ environmental impact.In a petition to the Ministry of Finance, SAS writes: “The memorandum lacks any form of analysis regarding the effects of the proposed tax. This applies to environmental effects and other effects on society. Instead, each statement in the memorandum demonstrates that earlier attempts at taxation have been abandoned because the form of taxation did not generate a positive environmental effect or that the structure of the taxation was directly unlawful.”

Unclear legal basis for tax
SAS also considers that the tax proposition has a weak legal basis and also writes in its petition:
“Nor has the Ministry of Finance been able to account for the basic legal conditions for introducing an air-travel tax in accordance with what has been proposed in terms of the international conventions to which Sweden is a signatory.

“We believe that there are obstacles to Sweden instituting taxation of operations conducted by non-Swedish companies.”

In addition, it is SAS’s opinion that there is a risk that the structure of the tax will result in increased an environmental impact instead of the opposite and that the higher ticket prices that will be a consequence of the tax will lead to a decline in the number of passengers and a subsequent cut in the airline industry in the long term.

Distortion of competition
The new tax also generates risks from the perspective of competition, SAS writes in its petition:
“The taxation plan also appears to be such that it will cause disruptions in the competition conditions between the airlines and in relation to other forms of transport.”

For further information, please contact:
Olle Näslund, Foreign & Public Affairs, SAS Group, +46 8 797 30 90

SAS Group Corporate Communications

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