Why isn’t there tax on aviation (or shipping) fuel?

A Panama Flagged, Marshall Islands shell company owned container vessel, that takes fuel in Singapore, collects cargo in China and delivers that cargo to Rotterdam… where exactly and to who, do they pay tax?

A Panama Flagged, Marshall Islands shell company owned container vessel, that takes fuel in Singapore, collects cargo in China and delivers that cargo to Rotterdam… where exactly and to who, do they pay tax?

Like I said divorce the whole thing from nations/states. In your example they can pay the UN directly seeing as they’ve landed in Rotterdam they could pay via the UNECE perhaps? Or wire transfer it anywhere they like, flat rate mileage based tax (in the case of shipping mileage could be verified via GPS tracking maybe?) same tarrif globally wherever the ship is registered, fuelled, sailing to or from paid directly to the UN.

Ports might choose to require that any emissions tax bill for the vessel is settled before cargo can be offloaded…

It really wouldn’t be that complex…

It really wouldn’t be that complex…

Why yes, yes it would.

Cookea, who is “they” who will pay? The ship owner, which happens to be JP Morgan via a finance deal directly with the shipyard? The ship owning company, which is just a paper company? The charterer of the vessel maybe, in Shanghai? But how will you get the Chinese government to force them to follow an EU directive? Ah by the way, the charterer of the vessel doesnt actually even own the fuel been consumed, because its provided to the vessel on 45 days credit by a trading house based in Geneva…. its not quite so simple!

Also, how much tax will they pay?

Is it based on vessel size?

Quantity of cargo carried?

Value of cargo carried?

Type of cargo carried?

A simple mileage could never work because an empty ship sailing to a scrapyard would pay the same as a fully laden 20,000 teu container ship, carrying £250 million worth of cargo.

Seems to me cookea’s basic concept is pretty sound, however, there’s clearly some elements that require a bit of refinement (unlike bunker fuel, eh chaps!!)

Fair points.

But frankly it doesn’t matter who pays does it so long as they pay?
If withholding permission to offload at a port forces them to stump up then job done.

A simple mileage could never work because an empty ship sailing to a scrapyard would pay the same as a fully laden 20,000 teu container ship, carrying £250 million worth of cargo.

Well much like with the Aircraft suggestion, if you pay full whack per mile for sailing without cargo (i.e. not generating any revenue) same as you would fully laden then you start to make unnecessary journeys uneconomic…

I would propose the Tax for cargo shipping should be based on a vessels maximum cargo capacity, flat rate per mile makes it easier to administer and it’s on the operator to make it financially viable…

The model is perhaps simpler for aircraft (passenger and cargo) than shipping but basing it simply on distance travelled rather than fuel or local interpretations of an international law/tariff makes sense.

If withholding permission to offload at a port forces them to stump up then job done.

That could never work. A lot of ports work too strict timetables, particularity container terminals. A 2 hour delay can have a big effect on the whole schedule.

Well much like with the Aircraft suggestion, if you pay full whack per mile for sailing without cargo (i.e. not generating any revenue) same as you would fully laden then you start to make unnecessary journeys uneconomic…

There are lots of vessels that have 1 single trade route and will deliver their cargo and return empty to pick another identical load. The operators don’t do that for fun, they would much prefer to be earning money, there is simply nothing suitable to make the return trip with.

In principle your idea seems simple and possible. It would also be a very good thing. However, as you have no understanding how the global shipping industry works, you can’t see how completely impracticable it would be in reality.

There are lots of vessels that have 1 single trade route and will deliver their cargo and return empty to pick another identical load

This. Oil is the obvious one, lots of ships go form the Middle East fully laden to Europe, drop their oil off and return empty. Oil tankers can’t really carry anything else so it’s not like you can throw a few containers on them for the return journey.

Surely there are checks on a ship’s displacement, to see if there’s any smuggling going on?

From that it’d be simple enough to have a flat rate per mile for all shipping, with an additional tariff applied depending on tonnage…

Yeah they weigh each and every ship to see if any pirate DVDs onboard

Arghhh! That’s some impressive calibration right there me hearties…

You’ve failed to declare 3 grains of sugar, straight to the brig

Surely there are checks on a ship’s displacement, to see if there’s any smuggling going on?

Again, that will vary. Bad weather will mean they’ll carry extra ballast for stability, good weather they’ll carry less for efficiency. This will often change over the journey, they may start heavy then offload as the seas improve.

Ah, fair enough, so rather than a dynamic tonnage tax, just apply a banded multiplier tariff according to the ships net tonnage in addition to a flat mileage rate.

Mileage from where? Container ships are dynamic beasts with cargo joining and leaving at different ports. Do it by manifest?

how do you rate duty for certain items (eg. Aid or medicine)?

Who collects all this data and how do you protect it from falling into the wrong hands? (piracy, third actors etc.)

Since when was the UN a supranational tax collection agency?

Seems like your idea has grown so many arms and legs it can hardly move. Like I said, nice idea but in the real world horrifically complex.

Given that most governments would be quite happy to raise taxes which don’t onbviously increase the rate of income tax, you might actually ponder the reasons behind the question: ‘Why isn’t there tax on aviation (or shipping) fuel?’. The short answer is that it is too complex to raise.

The funny thing is, goods and passengers are already transported the world over and it all works fairly well…

Much of this alleged complexity is being blown out of proportion;

Rather than tie mileage too much to the goods on board, surely it’d be better to apply it purely to the ship itself, so each time it docks, a tax is charged relating to the fuel used since the last time it docked.

when it comes to duty on items, that has nothing to do with the fuel charge; duty (or indeed tax relief) is already dealt with by customs.

Data is no biggie; airports and docks cope well enough as is and the journeys of planes and ships are easy enough for all to see already:

https://www.flightradar24.com

https://www.marinetraffic.com

The UN has it’s own army of Peacekeepers, not to mention Weapons Inspectors (the most senior non elected employee of HM’s government, Mark Sedwill, used to be a UN Weapons Inspector), so surely collecting tax would be easy enough, especially if it contributed to securing the future of the planet…

Yeah more tax to be passed onto the working man, yes I know it’s meant to save the world but as always those that can meat afford it will pay the price of airline costs go up

Rather than tie mileage too much to the goods on board, surely it’d be better to apply it purely to the ship itself, so each time it docks, a tax is charged relating to the fuel used since the last time it docked.

And we’re back to a blanket tax based in no way on efficiency of the voyage. Are you proposing that a UN navy inspection team be present at every port in order to inspect each ships oil logs to determine bunker usage? How are you going to fund that? Or is it a fund that will fund the collection of the fund and, er…

The complexity is not being blown out of proportion, I was Merchant Navy in another life and the stuff myself abd others are bringing up are real stumbling blocks. Ships manifests are not public info for damn good reasons, pirates would have a field day as well as any other folk with a vested interest in it not reaching its destination, you would have to fund increased anti piracy measures and where needed naval protection.

Can you explain to me why the ship’s manifest is so essential in all of this?

You know where a ship last docked, you know it’s net tonnage; why do you need to know what it’s carrying?

As for efficiency, surely there’s enough info on a specific ship’s build data give an idea of general efficiency and thus emissions?

Say we took up your idea of banning bunker fuel; how would you go about it and what alternative fuels are there?

What are the costs and how much improvement could we expect in terms of emissions?

Bunker fuel is banned in US and EU coastal waters as well as plenty of other LEZs (low emission zones) worldwide. The alternative is IFO (Intermediate Fuel Oil) or gasoil (kerosene) which are proper diesel fuels.

The improvement would be vastly reduced sulphur content, increased efficiencies from not having to heat, purify and process the fuel (meaning your generators don’t need to power as much) and less sludge and ash being generated and requiring disposal.

To answer your other questions why wouldn’t you want to know what a ship is carrying? Surely you wouldn’t be taxing a ship carrying aid or essential supplies? How about a proportion of a shops manifest?

Look, end of the day you asked why this isn’t done, plenty of people have responded with reasons why not and why you couldn’t. You can choose to accept this or not but it really is in no way as simple as you seem to believe it is.

Hmmm… the whole aid and essential supplies thing can often be misused…

You only have to look at the Tennesee mules shipped out to Afghanistan by US aid agencies under Larry Crandall in collaboration with the CIA to see that…

Or the way Live Aid funds were spent on weapons.

Ah fuggit, maybe the human race ain’t worth saving; shame about the planet mind…

“Yep, no tax = indirect subsidy”

By that logic most food is subsidised because it doesn’t attract VAT.

You only have to look at the Tennesee mules shipped out to Afghanistan by US aid agencies under Larry Crandall in collaboration with the CIA to see that…

Ah….

Hi.

Hello there, can I help you flyboy?

Look, end of the day you asked why this isn’t done, plenty of people have responded with reasons why not and why you couldn’t. You can choose to accept this or not but it really is in no way as simple as you seem to believe it is.

I’m more than willing to accept that it’s tricky. It seems beyond doubt that’s it’s a complex thing.

I’m not willing to therefore conclude that it’s impossible to do, no matter now important, just because it’s hard. Nor that we shouldn’t try.

If “we” were serious about it, surely a global agreement and a carbon tax paid by whoever pays the fuel bill, to a global fund*. Used to do Good Things. Start it at a low rate. Make it higher later.

*I expect this never to happen.

In all honesty, I don’t see it being a likely outcome…

It’s pretty clear the UN is riddled with corruption; you only have to look at the history of Karen Pierce (and Matthew Rycroft before her) to see that.

Then of course there’s the global tax avoidance industry, of which Britain is at the forefront, given the role of our head of state…

nowthen’s post at the top of the page is a pretty good illustration of the bigger picture.

Another tax probably isn’t going to be a vote winner; but I can’t imagine a great many votes are won on taxpayers money supporting wahabist extremism or bombing kids in far flung lands, but that’s not to say it doesn’t happen…

Air passenger duty can be charged on local activity but ships and planes can game tax regimes by fuelling on other countries. Depending on the level of tax they can be unintentionally incentivised to make extra stops or use additional fuel in order to make the most of the arbitrage. Huge potential unintentional consequences.

For shipping, perhaps. For aircraft, airliners aren’t capable of landing with full fuel tanks, therefore you have to take on fuel wherever you stop. It could just move the problem around, lead to short hops to other more favourable fuel tax regimes for long haul flights and associated potential increases in emissions overall.

It’s something that bothers me about domestic power and gas, too – and it feeds into an exaggeration of the environmental benefits of EVs in people’s perceptions (not that I don’t think they’re better than ICE vehicles with our current electrical generation mix, just that they’re still not good enough).

So the consensus from those in the know is… Just don’t bother?

Carry on along the trajectory we’re on because it’s a bit difficult to change things or impose any sort of governance or effective taxation on global shipping and transport and we wouldn’t want to upset businesses…

I suppose the important question then becomes how does global capitalism survive climate change and rising sea levels?

So the consensus from those in the know is… Just don’t bother?

Carry on along the trajectory we’re on because it’s a bit difficult to change things or impose any sort of governance or effective taxation on global shipping and transport and we wouldn’t want to upset businesses…

<sarcasm>Yep that’s exactly what we said. Got it in one.</sarcasm>

Of course it’s not like that is the ONLY way we could have a positive effect on global transportation emissions that would actually be effective down to individual nations. But we wouldn’t want to upset consumers would we?

Why is this discussion only about cargo vessels?

What about offshore support vessels?

What about tug boats?

There is talk about preventing inefficient and useless voyages, so are we going to stop cruise ships operating? A large cruise ship will produce about 80,000 kw of power, a huge amount runs just the AC. How pointless is that?

What about riding around in circles in the woods on a £4000 bicycle, built on the other side of the World? Is that also pointless?

Given your clear expertise on these matters, perhaps you could help us find some solutions to the issues you’ve raised…

What about riding around in circles in the woods on a £4000 bicycle, built on the other side of the World? Is that also pointless?

Oh for goodness sake, how dare you imply we’re part of the problem!

Given your clear expertise on these matters, perhaps you could help us find some solutions to the issues you’ve raised…

Tax at point of sale.

“Holiday” tax on flights – easy.
“Airmail tax” – transit tax based on emissions.
“carbon fibre tax” – tax based on end of life use (or not).
“food mile tax” – stops fish landed in Grimsby making their way to supermarkets via Shenzhen.

These all address cargo and transport applications which is the vast majority of global emissions. The rest is a drop in the ocean though I’m sure more could be found. They can be applied and collected locally and either spent locally or else diverted to funds encouraging green energy uptake in developing nations.

The advantage is it encourages industry to shift (gradually) to more localised manufacturing and people stop taking global travel for granted rather than the privilege it is.

Given your clear expertise on these matters, perhaps you could help us find some solutions to the issues you’ve raised…

I can’t think of any workable way to set up a global taxation system on fuel used for shipping. There are so many variables and ways to avoid it, that it simply isn’t practicable.

For example, I think we can all agree that a cruise ship makes no sense from an environmental or climate change point of view. However, they are never going to be “banned”. They will carry one with small improvements to their efficiency and to their relative emissions. However, they still use vast resources and energy to take rich people on their holidays.

All just another crazy part of the current global economy.

The problem isn’t the cost of fuel the problem is consumerism.

That’s not going to change over night, as others have said taxing fuels just makes everything more expensive, we buy less things, economies suffer, developing countries develope slower do take longer to clean up their industries. Developed countries can’t afford the investment needed to switch to newer technology and actually can’t even afford to maintain the living standards we have today….everyone’s life gets worse.

The key is to move away from a product based economy and develop a service based economy. We pay more for services rather than products… Use less resources, need less energy but still keep the economy going. We probably also have to get to the point of not focusing on GDP growth so much.

Whilst a purely service based economy sounds like an interesting concept, I’d appreciate if you could explain it to me a bit more, to help me get my head around it;

What would be on the menu in restaurants?

You pay for someone to polish your car… what do they polish it with?

A service engineer is called out to fix a lift, which needs new parts… where do the parts come from?

Your missus goes to a Yoga Class, but fails to reach a zen state due to lack of incense, candles and essential oils, along with the hard floor where her Yoga mat isn’t…

etc etc

We have a product based economy now. Services exist. The opposite can also be true. It is only the focus that changes.

Ok, it’s not my idea by the way…. Obviously not everything can become a service rather than a product. We still need food and clothes etc. But do we really need to own all the possesions we have? Media has already become service based, when did you last buy music on a CD? Do you watch films via a streaming service?

Other things that probably need to change and already are… Stop owning cars, rent them.. there’s already city car clubs. Stop owning bicycles, rent them. Same goes for pretty much any sport or activity. This would vastly reduce the quantity of products but money would continue to change hands. It has to become developed enough that it’s not an inconvenience or prohibitively expensive.

It could even be extended to white and brown goods. We used to have radio rentals…. Theres just this week been a new law passed to make manufacturers support white goods longer with spares. So we could rent our fridge freezers and cookers etc with a service agreement. When they break they get repaired or taken away and striped for parts.

We may get pushed into it anyway once there’s no such thing as cheap Asian manufacturing. When Asian developing countries catch up in terms of workers rights and wages everything will be more expensive so many people won’t be able to afford to own half the stuff we do now.

Basically, we can’t just tax fuel and expect that to fix the environment. The world needs to continue to be interconnected. We can reduce our consumption of products which would lead on to a reduction in energy and resource use but we will always need transportation. Technology has to be part of the answer for this and to create that technology we need a healthy economy. It’s evolution not revolution.

There’s any number of ways to fix the environment; there’s certainly plenty of spare funds floating about…

Fact #4: Just 11% of the Pentagon's current budget could fund enough wind+solar energy to power every single household in the U.S.

Imagine the impact of putting an 11% dent in the Pentagon's polluting budget and using it to give 128 million households clean energy forever. (5/8)

— Institute for Policy Studies (@IPS_DC) September 23, 2019

Well worth reading the whole thread, quite an eye opener!

However, in practical terms, how do you go about liberating those funds from the clenched fists of those rabid in their pursuit of wealth and power?

And how would you prevent those same issues under a service based economy?