Airline bailout tracker reveals ‘no conditions’ attached to loans
By TruePublica: The airline industry only survives in the first place because it was based on a race to the bottom and is consequently very heavily subsidised by the state in which they operate. In Europe it works like this as pointed out here by Transport and Environment:
“The sector depends heavily on public support — from tax exemptions from VAT and kerosene tax, to state aid for airports, low-cost airlines and infrastructure linking airports with nearby cities. Airlines also get 85% of their allocated pollution permits for free under the EU’s carbon market. The kerosene tax exemption in Europe alone is valued at €27 billion a year. Other more sustainable transportation methods — such as rail — have not benefited from such generous tax treatment.”
The airline industry is one of the biggest polluters in the world. To put perspective on that – the total increase of CO2 emissions over the period 2013 to 2018 was equivalent to building about 50 coal-fired power plants. That study also showed the UK is responsible for 4% of global aviation CO2 emissions, behind only the US (24%) and China (13%).
On the other hand, the overall public experience of privatised rail has been one of poor service, ever higher ticket prices and a raft of excuses as to why trains are late or cancelled. Overwhelmingly, the British public would be happy with the entire rail network in Britain to be renationalised as 64 per cent say it should be done, 17 per cent said they didn’t know but only 19 per cent would oppose such a move.
The airline industry is the fastest-growing sector for harmful emissions, and one of the most ‘tax-efficient.’
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As Tax Justice Network (TJN) says – “It remains to be seen however what meaningful green conditions could be imposed on airlines, one of the fastest-growing contributors to climate change over the last two decades.”
Now more than ever, the aviation industry is under intense pressure – not just from the collapse in business as a result of the pandemic but also a growing sense that the environment crisis will soon be at the top of the political agenda in many countries, as will handing out billions of taxpayers money to ‘offshored’ enterprises located in tax havens.
For instance, British Airways is owned by IAG – and its biggest shareholder is Qatar Airways. As the UK is no longer part of the EU there are no restrictions on the percentage of ownership – so Qatar have built even more share ownership at about 25 per cent. Qatar Airways is 100% owned by the state of Qatar – and yet the British taxpayer is on the hook for a £343million bailout loan – with no conditions.
The BA bailout is part of a wider package being supported by AIG in Spain – but a foreign state (not just investing individuals) – the wealthiest on earth, is being bailed out by British taxpayers who are up to their necks in debt.
This airline bailout tracker (HERE), reported at the TJN is revealing
And here are just a few snippets from that report:
- In total, the airline has 92 subsidiaries in corporate tax havens (using the Tax Justice Network’s Corporate Tax Haven Index as benchmark). In Malta, a subsidiary with only two employees made a profit of almost €200 million. Nine other Maltese companies are run by six employees and manage assets worth more than €8 billion.
- In the last ten years, Lufthansa paid only €3 billion in taxes on a profit of €15.6 billion. This corresponds to a rate of only 19.4 per cent compared to 32.45 per cent due at the company’s headquarters. Lufthansa’s tax practices have repeatedly led to high back payments and legal disputes in the past.
- The individual ownership structure suggests that they too are moving their profits to tax havens. German billionaire Heinz Hermann Thiele, who bought 10 per cent of shares in March 2020, is particularly noteworthy. He has, on several occasions spoken out against state influence and is himself engaged in aggressive tax “optimisation” using a family holding in an inner-German tax haven. In addition, many of the institutional investors are structured via the Cayman Islands or Delaware.
Tax Watch (UK) makes some good suggestions on how airlines can become more than symbolic politics – besides a repayment obligation if tax authorities find tax avoidance in the future, a blacklist should be created to exclude tax avoiders from state contracts, as well as detailed public data on state aid.