Wednesday, August 1, 2007

Tax on Airplanes and Air Flights.

Why We should increase Tax on Airplanes and Air Flights.

1. The Social Cost of Flying is much higher than the personal cost.

The external costs of flying include:

  • Pollution leading to global warming.
  • Noise pollution from nearby airports.
  • Decline in British sea side resorts
  • Damage to Foreign holiday resorts like the The Galapagos islands, where many other rare habitats are under growing threat.

The economic and social cost of flying is much higher than alternative forms of transport such as trains. Therefore, there is a good economic reason to tax air-planes. The money could be used to subsidise trains and other forms of more environmentally friendly travel.

2. Raise Tax Revenue.

This means other types of taxes can be reduced. Or the tax can be used to subsidise other types of spending.

3. Air Travel is a luxury good. Travel to foreign countries is rarely a necessity. Foreign holidays are a luxury good. Demand has increased more than proportionately following increased economic growth. Therefore, there is no harm in reducing the demand of this good.

Alternatives to Taxing

1. Limiting the number of flights from airports and limiting the number of airports.

This artificial restriction in supply will have the effect of increasing the price and therefore, reducing demand. Taxes have the same effect except the government get the revenue.

2. Make Airplanes more environmentally friendly.

Fit more people onto a plane. For example, some airline companies are suggesting standing room tickets. These flights will be more environmentally friendly. It is also possible the development of some fuels will be more environmentally friendly.

No comments: