In a move that shows the potential connections between taxes and climate change, Portugal introduced a carbon tax on travel by sea and air. This is part of the country’s efforts to reduce its impact on the planet and it applies to everyone, regardless of residency.
The Carbon Tax Affects All Travelers
The new carbon taxes apply directly to passengers. This contrasts with traditional approaches to carbon taxes that require a company to pay by instead following a “user-pays principle.” In this model, the person using the resource pays for the cost associated with reducing its natural capital.
The carbon tax will not require any tax planning for travelers, however, as it will be fairly small – just 2 EUR per passenger. The legislation refers to it as a “fee” instead of a tax.
Other countries, including the UK, Sweden, the Netherlands, Norway, Germany, France, and Austria, have already implemented similar strategies for carbon emissions management.
The Portuguese tax will apply to domestic and international flights and includes any flight that departs within Portugal.
The goal behind the tax is clear: Portugal hopes that the fee will compensate for travel’s negative environmental impact. This includes the carbon emissions and other pollutants. It is essentially a forced investment in eco-friendly solutions.
Why Portugal Chose the Air Travel Tax
Portugal is very clear about why it chose to implement a carbon tax on air travel, having outlined it in the State Budget Law for 2021 as well as Ordinance No. 38/2021. Both refer to this as a “balanced” solution.
The funds from the carbon tax will go to the Environmental Fund, a Portuguese public structure that is working towards energy transition and sustainable policies. The tax is also nominal so that it will hopefully improve the economy.
The ordinance also points out that this tax is easy to apply and easy for users to notice.
Why Portugal Chose the Sea Travel Tax
Some of the reasons for the sea travel tax are similar and they are outlined in the same ordinance. It mentions that Portugal prides its ports on being global logistics platforms. It also outlines the goal of leading green shipping, as well as efficiency and sustainability.
The ordinance mentions cruise tourism as the major type of sea travel that will affect the average person. It reemphasizes that Portugal wants to reduce greenhouse gas emissions.
Portugal refers to the sea travel tax as “balanced.” As with the carbon tax on air travel, the tax goes to the Environmental Fund. Some of the revenue will also go toward air quality measurement campaigns.
Children under two years old do not have to pay the carbon tax. There are also a handful of other exceptions. It doesn’t apply to the transport of passport holders in autonomous regions, as long as they are traveling between the region in question and the mainland.
Part of the Carbon Neutral Goal
The carbon tax is just one portion of Portugal’s plan to achieve carbon neutrality. The country hopes to reach zero net emissions and outlines some of its plans in “Roadmap for Carbon Neutrality 2050.” This report argues that becoming carbon neutral is feasible, both economically and technologically.
The plan introduces phased goals, which start with the aim to reduce carbon emissions by 45% to 55% by 2030. By 2040, it hopes to have reduced emissions by 65% to 75%, and then to reduce emissions by 85% to 90% by 2050. Portugal hopes to offset the remaining emissions with forestry and agricultural carbon sequestration, which should have a capacity of about 13 million tons.
When It Goes Into Effect
The new carbon tax will go into effect on July 1, 2021.
The Portuguese government plans on tracking the program’s success and will include a report on the environmental and economic impacts. That report will hopefully be published by the end of September 2022 according to directors and managers.
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