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21 July, 2024
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EU mulls tax breaks for islands nations on aviation fuel

Proposed exemptions could ease financial impact on island nations such as Cyprus


European Union nations are in talks to grant exemptions for a proposed EU-wide tax on aviation fuel, particularly favoring islands. A draft document from Belgium, the current EU presidency holder, reveals discussions to ease rules for islands heavily reliant on aviation and shipping. This exemption could benefit countries like Ireland, Cyprus, Malta, Spain, and Greece.

The proposed EU tax overhaul, aiming for climate-friendly energy tax rules, includes gradually taxing fuels for flights within the 27-nation bloc. The draft compromise suggests negotiations for more lenient regulations for islands—both island nations and those with island territories.

According to the draft, islands might be exempted from the jet fuel tax until 2032. Meanwhile, other countries would face a minimum EU tax rate starting from 2028, gradually increasing over time. Member states could also introduce their national levies soon after the policy's adoption.

These changes are designed to address the economic concerns of island nations, but critics argue they could hinder the policy's effectiveness in reducing greenhouse gas emissions.

Flights to and from islands contribute around 22% of all fuel consumption from flights within the EU. Diplomats will discuss the compromise, and if it gains support, it could be sent for ambassador approval. However, some EU diplomats caution against measures that might increase fuel prices for voters ahead of the June European Parliament elections.

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