Chancellor Angela Merkel’s sweeping moves to cut carbon emissions from transport took a step closer as details emerged over plans to increase tax on air travel.

Germany will raise levies on all flight tickets, both domestic and long-haul trips, according to an air transport bill. The move, taking effect from next year, is a key part of plans to slash CO2 output from roads and planes by 2030 as well as bolstering government coffers.

Merkel’s coalition aims to rebalance federal tax receipts when value-added tax is cut on rail tickets from next year, a move aimed at persuading consumers to switch to less-polluting forms of transport than air travel. German flyers should expect higher prices, the draft states.

The planned tax increase will “find a direct route to prices for air travelers,” according to the 10-page draft, a copy of which was seen by Bloomberg News. “Especially where discount air carriers are concerned — travelers will find that the tax will make up a significant part of the total ticket price.”

Brian Parkin, William Wilkes, and Vanessa Dezem, ©2019 Bloomberg L.P.

Critics of the plan include the BDL air industry lobby and Ryanair Holding Plc. They say the tax increase won’t reduce flight emissions and will have a bigger impact on high-volume budget carriers than on national airline Lufthansa AG.

Lufthansa Chief Executive Officer Carsten Spohr has blasted his rivals for offering tickets as low as 10 euros each, saying prices that low are economically and ecologically irresponsible.

BDL spokesman Ivo Rzegotta said lobby members aren’t happy with the “go-it-alone-in-Europe” proposal. “We doubt it will dent emissions at all. We need an international approach that tackles CO2 output directly,” Rzegotta said last month, when the proposal was unveiled by Merkel’s coalition.

The government will raise an extra 500 million euros ($549 million) annually from air tickets, according to the draft. In exchange, the public-owned rail company Deutsche Bahn AG will halve its 19 percent VAT rate on tickets, passing the savings directly to travelers.

©2019 Bloomberg L.P.

This article was written by Arne Delfs, Siddharth Philip and Brian Parkin from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Photo Credit: Discount airlines like Ryanair and EasyJet could be disproportionately affected by Germany's proposed regulatory changes. Anna & Michal / Flickr