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Last Updated: Sunday, 15 May, 2005, 14:12 GMT 15:12 UK
EU ministers agree tax on flying
Inside of a jet engine
Could a tax on airlines generate development cash?
A voluntary air travel tax to fund aid for the world's poor was agreed in principle at the European finance ministers' meeting on Saturday.

The ministers are using the two-day session to talk about European economic growth and redesigning euro coins to reflect the larger European Union.

The Franco-German proposal for an aviation tax will see a tax on airline tickets.

Another option - a tax on jet fuel was rejected.

Mixed reaction

This will be a voluntary contribution which some member states propose to turn into a mandatory contribution
Luxembourg Prime Minister Jean-Claude Juncker

Only a handful of countries said they would definitely adopt the new airline tax.

"This will be a voluntary contribution which some member states propose to turn into a mandatory contribution but we are leaving this open," said Luxembourg Prime Minister Jean-Claude Juncker.

Mr Juncker, who chaired the talks involving 25 EU finance ministers, said five or six countries were ready to go ahead.

The tax is expected to be compulsory in Belgium, France and Germany, while Malta and Cyprus and Ireland would give passengers a choice as to whether they pay it.

The EU is to prepare a formal proposal on the tax for the finance ministers' next meeting on June 7, Mr Juncker said.

The airline tax was "one of a number of proposals" for ways to meet the EU's anti-poverty pledges under the Millennium Development Goals, an EU spokesman told the BBC News website.

The Millennium goals set the target of halving poverty worldwide by 2015.

Opposition strong

The aim is to go to the United Nations with a common EU position," said Joaquin Almunia, EU Monetary Affairs Commissioner
EU spokesman

However, some countries and organisations were opposed to the tax, which is expected to be in the region of two to three euros but could be higher.

Austrian finance minister Karl-Heinz Grasser said it was a burden on consumers and a distortion of competition.

British Airways described the tax as "absurd" and "illogical" in an article in the Sunday Telegraph, a UK newspaper.

Another UK airline, easyJet, suggested to the Sunday paper that ministers look to the oil industry if they want to alleviate global poverty.

Aid to world poor

On Friday, an opening session of ministers from the 12-nation eurozone weighed up the region's patchy economic outlook and high oil prices, before the 25-member talks on Saturday.

"We're seriously concerned by the situation," said the meeting's chair, Jean-Claude Juncker, the prime minister of Luxembourg, after initial talks on Friday.

Discussions on fighting world poverty on Saturday were part of preparations for a United Nations summit in September to review progress on the Millennium goals.

"The aim is to go to the United Nations with a common EU position," said Joaquin Almunia, EU Monetary Affairs Commissioner.

The EU wants the 15 old member states to contribute 0.51% of gross national income to development aid by 2010 as a step towards the UN target of 0.7% by 2015.

It wants the 10 newer states to contribute 0.17% of GNI.

There was some support for this plan but countries like Germany, which are struggling with a big budget deficit, said they could not agree to these targets.

The EU has promised any aviation tax would be passed only after full consultation with airlines to avoid hurting competitiveness.

The tax will contribute to the International Finance Facility for Immunisation, a body set up by donor countries to buy vaccines.

This is seen as a pilot project for a broader IFF development fund that could use bonds to raise aid money.

See some of the projects the tax could help fund

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Can Africa's poverty be beaten?
04 Feb 05 |  Africa
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07 Feb 05 |  Business

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