Lead Project Description:

The aviation sector contributes significantly to greenhouse gas emissions but remains largely untaxed due to outdated international legal frameworks. This project explores how tax law can be reformed to better align aviation policy with climate goals, offering concrete legal solutions to help Switzerland and other countries reduce emissions.

Executive Summary:

The aviation sector is responsible for 11% of Switzerland’s greenhouse gas (GHG) emissions and continues to grow globally. Because it is difficult to decarbonize once expanded, urgent action is needed. Experts agree that reducing emissions requires both cleaner technologies and lower demand—often through taxation. However, aviation enjoys broad tax exemptions due to outdated international tax rules, which shape national policies. In Switzerland and many other countries, the sector is exempt from most indirect taxes and benefits from special treatment under some direct taxes, like corporate income tax. These rules remain largely unchallenged, despite the climate crisis. Legal research in this field is almost nonexistent in Switzerland and very limited globally. Many existing studies tend to focus narrowly on one tax or jurisdiction and rarely suggest comprehensive reforms. Key issues—such as taxing aviation fuel or understanding the effects of corporate tax rules—remain unexplored. This project aims to fill these gaps through a holistic legal analysis of aviation taxation. It will study two key areas: (1) taxes that internalize environmental costs (like GHG emissions), and (2) the role of corporate tax in promoting sustainable practices. The legal team will collaborate with the Center for Aerospace Competence at the University of St. Gallen. The project will produce the first comprehensive legal study of aviation taxation, offering practical proposals for Swiss lawmakers and informing global tax reform. It also aims to raise public awareness and support climate commitments under international law.