5.9 billion pounds could have been raised if the UK had applied fuel duty to jet fuel
3.7 MtCO2 emissions could have been saved if the UK had applied fuel duty to jet fuel
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£5.9 billion. That’s how much money the Government could have collected in taxes in 2023 by simply charging fuel duty on all jet fuel at the same rate as British drivers are charged.
Incredibly though, unlike British drivers, hauliers, rail operators and farmers, airlines do not pay tax on the fuel they burn. Road fuel duty is currently levied at just under 53p per litre and this revenue accounts for approximately 5% of Government revenues. And at least some will, in theory, go to the costs that society has to pay due to burning fossil fuels.
These costs include NHS costs due to increased air pollution and infrastructure adaptation costs due to worsening climate breakdown. These costs occur due to the burning of fossil fuels - including jet fuel - but yet the aviation sector does not contribute a penny in fuel taxes despite burning 11.1 million tonnes of jet fuel in 2023. For context, this was almost the same amount of petrol as was burnt in the UK last year.
This briefing has analysed the effects of applying fuel duty at different rates and to different destination regions. All bar one of the rates chosen are rates that exist and are already charged on other transport fuels. The findings show that the UK government is missing out on between £0.4 to 5.9 billion annually depending on the routes covered and tax rate applied.
To ensure that jet fuel is fairly taxed, the Government needs to use the upcoming autumn budget to:
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Apply a 9p fuel duty rate to kerosene starting in 2025. Thereafter the rate should be raised annually until it matches road fuel duty in 2030.
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Require airlines to purchase 90% of the fuel for all departing flights at UK airports to prevent airlines from purchasing untaxed kerosene from outside the UK.
