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England and Wales High Court (Administrative Court) Decisions
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Cite as:  EWHC 2062 (Admin)
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| The Queen on the application of (1) FEDERATION OF TOUR OPERATORS
(2) TUI UK LIMITED
(3) KUONI TRAVEL LIMITED
|- and -
|HER MAJESTY'S TREASURY
|(1) HER MAJESTY'S REVENUE & CUSTOMS
(2) HM ATTORNEY GENERAL ON BEHALF OF THE SPEAKER OF THE HOUSE OF COMMONS
David Anderson QC and Sarah Lee (instructed by the General Counsel and Solicitor to Her Majesty's Revenue and Customs acting as agent for HM Treasury) for the Defendant
Clive Lewis QC and Ben Hooper (instructed by the Treasury Solicitor) for HM Attorney General, intervening on behalf of the Speaker of the House of Commons
Her Majesty's Revenue and Customs did not appear and were not represented.
Hearing dates: 17, 18, 19 and 20 July 2007
Crown Copyright ©
Stanley Burnton J :
(a) that the imposition of the Duty is in breach of Article 15 of the 1944 Chicago Convention on International Civil Aviation (known as the Chicago Convention), which has been incorporated into our municipal law by the EU legislation on the creation of a Single European Sky;
(b) that the increase in the Duty, imposed in the manner in which it was, infringed their rights under Article 1 of the First Protocol ("A1P1") to the European Convention on Human Rights;
(c) that the imposition of APD or its increase is and was contrary to Article 49 of the European Treaty.
APD and the Package Travel Regulations
Air passenger duty
28(1) A duty to be known as air passenger duty shall be charged in accordance with this Chapter on the carriage on a chargeable aircraft of any chargeable passenger.
(2) Subject to the provisions of this Chapter about accounting and payment, the duty in respect of any carriage on an aircraft of a chargeable passenger –
(a) becomes due when the aircraft first takes off on the passenger's flight, and
(b) shall be paid by the operator of the aircraft.
(3) Subject to section 29 below, every aircraft designed or adapted to carry persons in addition to the flight crew is a chargeable aircraft for the purposes of this Chapter.
(4) Subject to sections 31 and 32 below, every passenger on an aircraft is a chargeable passenger for the purposes of this Chapter if his flight begins at an airport in the United Kingdom.
(5) In this Chapter, "flight", in relation to any person, means his carriage on an aircraft; and for the purposes of this Chapter, a person's flight is to be treated as beginning when he first boards the aircraft and ending when he finally disembarks from the aircraft.
11. — (1) Any term in a contract to the effect that the prices laid down in the contract may be revised shall be void and of no effect unless the contract provides for the possibility of upward or downward revision and satisfies the conditions laid down in paragraph (2) below.
(2) The conditions mentioned in paragraph (1) are that—
(a) the contract states precisely how the revised price is to be calculated;
(b) the contract provides that price revisions are to be made solely to allow for variations in:—
(i) transportation costs, including the cost of fuel,
(ii) dues, taxes or fees chargeable for services such as landing taxes or embarkation or disembarkation fees at ports and airports, or
(iii) the exchange rates applied to the particular package; and
(3) Notwithstanding any terms of a contract,
(i) no price increase may be made in a specified period which may not be less than 30 days before the departure date stipulated; and
(ii) as against an individual consumer liable under the contract, no price increase may be made in respect of variations which would produce an increase of less than 2%, or such greater percentage as the contract may specify, ("non-eligible variations") and that the non-eligible variations shall be left out of account in the calculation.
The introduction of the Duty and its increase
"… the package travel market is extremely price sensitive. Small increases in relative prices produce substantial decreases in tourism arrivals. Our immediate concern however is for a postponement until at least 1st November 1994. This would coincide with the majority of package holiday brochures, which run from 1st May to 31st October (summer) and from 1st November to 31st April (winter).
Summer 1994 brochures have been published since August 1993. The recently introduced Package Travel Regulations make it a legal and practical impossibility to alter prices in published brochures. These regulations require tour operators to absorb the first 2 % of any increases in prices. Thus, in nearly every case, the duty could not legally be passed to consumers until 1st November 1994. The Regulations also make it extremely difficult, if not impossible, to alter published prices without a full reprint. As there are probably almost 100 million brochures in circulation and 800 tour operators and 7000 travel agents, you will appreciate that the cost and complexity of making the necessary price changes is effectively ruled out.
It is a feature of the package travel industry that profit margins are extremely slim. Civil Aviation Authority figures reveal that 1% to 2% is perfectly normal. The introduction of this duty without the ability to pass the extra cost to consumers will result in major problems for tour operators."
"The Paymaster General, the Rt Hon Sir John Cope MP, announced in the House of Commons today that the Chancellor of the Exchequer has decided that the date of introduction of air passenger duty should be deferred one month to 1 November 1994. The Government will table an amendment to the Finance Bill for approval by Standing Committee.
Commenting, the Paymaster General said, 'The Government has agreed to the change following representations from holiday tour operators who are concerned that most summer holiday brochures were published before the Budget announcement of the new duty and run to the end of October 1994. A large number of holidays have already been sold for October 1994 and many tour operators cannot recover air passenger duty on these sales because of 'no surcharge' guarantees in brochures.
We accept it would be unreasonable to expect tour operators to take the theoretical possibility of this new duty into account when they made their guarantees, and so the Government has agreed to a special concession in 1994, to accommodate tour operators. The delay will also give airlines one further month to prepare for the new duty."
The italics have been added. The italicised words are relied upon by the Claimants.
"I have now considered further the difficulties you described for tour operators if air passenger duty commenced on 1 October 1994, given that most brochures had been published before the Budget for holidays up to the end of October 1994. I recognise that there was no hint of the possibility of a tax on air travel at the time that brochures were published and "no surcharge guarantees" were offered for summer 1994, and that October is a difficult month for tour operators' cash flow.
I accept that it would be unreasonable to expect tour operators to have taken the theoretical possibility of this new duty into account when they made their guarantees. I am pleased to be able to let you know that I therefore announced in the House of Commons on 31 January that the government intends to offer a special concession for 1994 and defer the start date of the new duty to 1 November 1994. We will table an amendment to the Finance Bill for approval by Standing Committee.
In deciding upon 1 November as the new start date, I took into account that this was the date suggested by most holiday tour operators who made representations to the Government on this particular aspect of the new duty, while balancing the revenue effects of delaying the implementation date."
"Those increases will not come into effect until 1 November 1997, … the very good reason for delaying until November 1997 is to give tour operators time to reflect these new rates in the prices they publish in their holiday brochures."
(a) for passengers flying to destinations within the UK, the Isle of Man, the Channel Islands and members of the European Economic Area, and the European Common Aviation Area (in addition to the countries of the EU, Albania, Bosnia Herzegovina, Bulgaria, Croatia, Iceland, Macedonia, Norway, Serbia-Montenegro, Romania and the temporary UN mission in Kosovo) and Switzerland, from £5 to £10 for standard (i.e. tourist) class passengers, and from £20 to £40 for other (first, business and premium economy) classes;
(b) for passengers flying elsewhere, from £10 to £20 for standard class passengers and from £40 to £80 for other passengers.
"The travel industry takes bookings for holidays many months in advance of departure, and it is our calculation that there are already some four million holidays sold by the travel industry with departure dates after 1st February 2007."
He referred to the provisions of the Package Travel Regulations and continued:
"In consequence, in relation to the four million bookings already taken, tour operators will be obliged to absorb the whole amount of the increase in Air Passenger Duty, and will be unable to pass any of this on to their customers.
Previous governments, both on introducing the Air Passenger Duty and making changes to the rates have recognised this booking profile, and have allowed sufficient time to mitigate the impacts of forward booking. Clearly the implementation of significantly higher rates of tax on less than two months notice does not achieve that objective, at a time where tour operators in particular are already significantly under pressure in relation to their incomes.
We appreciate that this was unlikely to be the intentional desire of Government, and are writing to ask as a matter of urgency if you could give consideration to some form of relief in relation to travel arrangements already booked, either by providing an exemption in relation to bookings already made – assuming some suitable mechanism for notifying these can be found within HM Revenue and Customs or by allowing tour operators to retrospectively charge their customers the additional costs which have been incurred by the change.
Final balances on holiday departures in early February are already due from customers, and in consequence, we would be very grateful if urgent consideration be given to this request."
"Therefore the Government have decided that further action should be taken now, and that APD increases have a role to play in aviation meeting its environmental costs.
PBR and Budget decisions take into account all relevant policy factors. Clearly there are operational issues related to APD, which were taken into account but balanced against factors such as revenue and environment.
In striking that balance Ministers came to the view that a 1 February date for the rate change was appropriate. Though obviously where there are administrative or operational issues you want to discuss, we, along with HMRC colleagues, are happy to do that."
The PBR policy decision was quite clear – Ministers had decided that the change would apply to flights on or after 1 February and this was fixed.
Ministers had taken into account all factors, including operational factors, but:
HMRC/HMT were very open to discussing administrative or operational issues.
"Overall airlines expected there might be some change to APD, however did not expect a doubling of rates
Also extremely disappointed/surprised about the 1 February date for the change. Believes the only sensible way that airlines could collect this extra (for those who have booked) is at the airports. But an almost 'impossible burden' on the industry.
In the past significant notice 9-12 months had been given on changes. Suggested that an accommodation is found for people who booked before PBR day."
"We do not agree changes are retrospective. They were announced on 6 December to take effect from 1 February. However, we accept that some customers will have booked flights for after 1 February, before PBR day. Furthermore previous changes have been made in the same way without concession for those who had already booked at the time of announcement (though of course it was less of an issue)."
"Although people are now typically buying later now earlier (sic), there are still significant numbers of people who have bought packages for after 1 Feb, 2007. Among the tour operators this amounts to 4m people, of which 2.7m after 1 May, and 1.3m between 1 Feb and 1 May. Of those between Feb and May, he said that around half were going to non-EU destination. Of those after May, around a third were to non-EU destination.
Values of this are £17m 'winter', and £27m 'summer'. Only limited double counting here with airline figures.
Highlighted the fact that UK regulations mean that operators can only reclaim tax increases above 2% of the value of the package sold. This will not be the case with the APD increments – so unlike airlines, operators have no means to recoup the money. This at a time when the sector is recovering from a 'truly dreadful' summer, although First Choice had recently announced some promising figures.
Incoming travellers, having booked with non-UK operators, would also be impacted on their return journey."
"Edward (Troup) then thanked people for their comments and brigaded the points made into three areas:
(i) the decision to double the rates
(ii) the 1 February start date, and;
(iii) the (Virgin Atlantic) issue of whether the banding descriptions were fit for purpose – which we could follow up in the coming months.
On the issue of the start date, Edward said that nothing the airlines had raised today was a surprise to HMT and those issues had been taken into account when making the decision.
He also asked those present to confirm the view that whether it was 1 February, 1 March or 1 April made little difference. Key issue was whether it was before or after the key summer season. No one questioned this.
He then invited further specific questions/comments."
"We need to know asap about the decision as systems need to be changed to ensure new rates are payable. Edward stressed that BA and others should change systems now (i.e. immediately after PBR) as the decision was fixed and final."
"assured (the representatives) that their views would be relayed to Ministers, but reiterated the firm position, as per the PBR day announcement, and the introductory key messages above."
"Our client's immediate concern is about the timing of the implementation of the increase in APD, although our client also considers that APD is itself unlawful in any event."
The grounds of challenge to the increase in the tax and the tax itself were broadly those advanced before me. On the following day, 1 February 2007, the increase in APD duly took effect. The Treasury replied to Herbert Smith by an undated letter received on 14 February 2007. The only concession offered was that for February only payment of the increase would be deferred for one month. The Government introduced a Parliamentary resolution under the Provisional Collection of Taxes Act 1968 to bring the increases into effect. As mentioned above, the increases were subsequently enacted in the Finance Act 2007, which received the Royal Assent during the course of the hearing. The parties had sensibly agreed that this case should be argued on the assumption that the legislation had already been enacted; in the event, the assumption was unnecessary.
The grounds of challenge to APD and its increase
The Chicago Convention signed on 7 December 1944 and the creation of the International Civil Air Transport Organisation (ICAO)
"The consequence of the studies initiated by the US and subsequent consultations between the Major Allies was that the US government extended an invitation to 55 States or authorities to attend, in November 1944, an International Civil Aviation Conference in Chicago. Fifty-four States attended this Conference end (sic) of which a Convention on International Civil Aviation was signed by 52 States set up the permanent International Civil Aviation Organization (ICAO) as a means to secure international co-operation and the highest possible degree of uniformity in regulations and standards, procedures and organisation regarding civil aviation matters. At the same time the International Services Transit Agreement and the International Air Transport Agreement were signed.
The most important work accomplished by the Chicago Conference was in the technical field because the Conference laid the foundation for a set of rules and regulations regarding air navigation as a whole which brought safety in flying a great step forward and paved the way for the application of a common air navigation system throughout the world.
Because of the inevitable delays in the ratification of the Convention, the Conference had signed an Interim Agreement, which foresaw the creation of a Provisional International Organization of a technical and advisory nature with the purpose of collaboration in the field of international civil aviation (PICAO). This Organization was in operation from August 1945 to April 1947 when the permanent ICAO came into being. Its seat was in Montreal, Canada and in 1947 the change from PICAO to ICAO was little more than a formality."
"… the undersigned governments having agreed on certain principles and arrangements in order that international civil aviation may be developed in a safe and orderly manner and that international air transport services may be established on the basis of equality of opportunity and operated soundly and economically."
Scheduled air services
No scheduled international air service may be operated over or into the territory of a contracting State, except with the special permission or other authorization of that State, and in accordance with the terms of such permission or authorization.
Each contracting State shall have the right to refuse permission to the aircraft of other contracting States to take on in its territory passengers, mail and cargo carried for remuneration or hire and destined for another point within its territory. Each contracting State undertakes not to enter into any arrangements which specifically grant any such privilege on an exclusive basis to any other State or an airline of any other State, and not to obtain any such exclusive privilege from any other State."
"Stop for non-traffic purposes" is defined by Article 96 as "a landing for any purpose other than taking on or discharging passengers, cargo or mail".
"Airport and similar charges
Every airport in a contracting State which is open to public use by its national aircraft shall likewise, subject to the provisions of Article 68, be open under uniform conditions to the aircraft of all the other contracting States. The like uniform conditions shall apply to the use, by aircraft of every contracting State, of all air navigation facilities, including radio and meteorological services, which may be provided for public use for the safety and expedition of air navigation.
Any charges that may be imposed or permitted to be imposed by a contracting State for the use of such airports and air navigation facilities by the aircraft of any other contracting State shall not be higher,
(a) As to aircraft not engaged in scheduled international air services, than those that would be paid by its national aircraft of the same class engaged in similar operations, and
(b) As to aircraft engaged in scheduled international air service, than those that would be paid by its national aircraft engaged in similar international air services.
All such charges shall be published and communicated to the International Civil Aviation Organization: provided that, upon representation by an interested contracting State, the charges imposed for the use of airports and other facilities shall be subject to review by the Council, which shall report and make recommendations thereon for the consideration of the State or States concerned. No fees, dues or other charges shall be imposed by any contracting State in respect solely of the right of transit over or entry into or exit from its territory of any aircraft of a contracting State or persons or property thereon."
"Each contracting State may, subject to the provisions of this Convention, designate the route to be followed within its territory by any international air service and the airports which any such service may use."
"(3) The privilege to put down passengers, mail and cargo taken on in the territory of the State whose nationality the aircraft possesses;
(4) The privilege to take on passengers, mail and cargo destined for the territory of the State whose nationality the aircraft possesses;
(5) The privilege to take on passengers, mail and cargo destined for the territory of any other contracting State and the privilege to put down passengers, mail and cargo coming from any such territory."
The interpretation of Article 15
"charges are levies to defray the costs of providing facilities and services for civil aviation while taxes are levies to raise general national and local government revenues that are applied for non-aviation purposes."
(From the third recital to the ICAO's Council Resolution on Taxation of International Air Transport, referred to below.)
163. Since … the majority number of UK departing flights are international and exit UK territory shortly after take off, APD operates as a levy on the right of exit from UK territory of the majority of passengers on board aircraft departing UK airports, i.e. a "gateway" charge. It matters not that the "trigger" for APD is the flight beginning from a UK airport. APD results in a charge "solely" on the right of exit of air passengers from UK territory.
164. It would have been in the contemplation of the draftsmen and delegates that for aircraft and passengers on board to "exit" a contracting State's territory, the flight would have to take off from an airport in that contracting State. It is not sensible to suggest that the signatories did not intend to prohibit all "fees, dues or charges" which would inevitably be triggered during the process of flights exiting (or entering or transiting) UK territory.
165. A purposive construction would suggest that Article 15 CC was intended to prohibit any "gateway" charges of whatever nature and howsoever levied.
The principles of interpretation applicable to the Convention
"A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose."
"(b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; …"
"Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31:
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd or unreasonable."
"1. When a treaty has been authenticated in two or more languages, the text is equally authoritative in each language, unless the treaty provides or the parties agree that, in case of divergence, a particular text shall prevail.
2. A version of the treaty in a language other than one of those in which the text was authenticated shall be considered an authentic text only if the treaty so provides or the parties so agree.
3. The terms of the treaty are presumed to have the same meaning in each authentic text.
4. Except where a particular text prevails in accordance with paragraph 1, when a comparison of the authentic texts discloses a difference of meaning which the application of articles 31 and 32 does not remove, the meaning which best reconciles the texts, having regard to the object and purpose of the treaty, shall be adopted."
The interpretation of the texts of the Convention
"Any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation."
The travaux, on the other hand, are, as I have stated above, a "supplementary means of interpretation", under Article 32.
(a) The imposition of APD by the UK Government in 1994.
(b) The lack of any protest or complaint to its doing so in the 13 years since it was first imposed.
(c) The fact that other states have imposed similar taxes without protest or complaint.
(d) The lack of any condemnation of any such tax by the ICAO.
(e) The fact that a large number of States support the imposition of the so-called Chirac tax, which, on the Claimants' case, would also infringe Article 15.
"While the data used in them distinguish between airport charges (which usually accrue to the airport authority) and arrival/departure taxes (which usually accrue to the government), it is in many cases unclear to which of these two categories the charge should be allocated."
(a) Australia had a departure tax until 31 December 1994, when it was replaced by a charge. It made the general comment cited below.
(b) Until 31 December 1997, Barbados had a travel tax of 20 per cent on airline tickets.
(c) Hong Kong had an Air Passenger Departure Tax payable by every passenger unless exempted.
(d) Ecuador imposed a tax of 10 per cent of their value on airline tickets.
(e) India imposed a Foreign Travel Tax on every passenger leaving India by flight.
(f) Pakistan declared that it was free to impose such taxes as it thought fit, without regard to ICAO policies (to which I refer below).
(g) Peru imposed a tax, quantified in Indirect Taxes on International Aviation at US$43 per passenger.
(a) Austria had "a 'Security Levy' to be paid by departing passengers which has the characteristics of a Federal Tax".
(b) Ireland had a travel tax of Ir£5 on all passengers departing by both air and sea.
(c) Norway levies "a tax … per passenger on the main routes of Southern Norway as well as on international scheduled and non-scheduled flights. The revenue from the tax accrues direct to the Norwegian Exchequer."
"General Comment – While we understand that ICAO has the right to make recommendations and resolutions regarding international aviation taxation issues, we strongly oppose the creation of separate taxation regimes for particular groups, including international airlines, and would oppose any moves by ICAO to makes its taxation policy binding on Contracting States.
Australia's policy remains that questions relating to the taxation of international airlines should be dealt with in the context of Australia's overall taxation policy. Australia will therefore continue to address these issues only in double taxation agreements and, less commonly, international airlines profits agreements.
Extension of ICAO taxation policies to taxes levied at sub-national levels – Australia cannot agree to the provisions extending ICAO taxation policies to local tax authorities. Australian States and Territories have their own taxing powers that they legitimately possess. This is reflected in the fact that Australia's double taxation agreements and airline profit agreements do not cover State taxes."
"The Chicago Convention on International Civil Aviation of 1944 did not attempt to deal comprehensively with tax matters. The Convention simply provides (cf. article 24 (a)) that fuel and lubricating oils on board an aircraft of a Contracting State on arrival in the territory of another Contracting State and retained on board on leaving the territory of that State shall be exempt from customs duty, inspection fees or similar national or local duties and charges. The same Article of the Chicago Convention also refers to the temporary admittance, free of duty, of aircraft on a flight to, from or across the territory of another Contracting State and the exemption from customs duty, etc., of spare parts, regular equipment and aircraft stores."
Not only is Article 15 not referred to; I read the second sentence as identifying the sole provision of the Convention that dealt with taxation.
"Whereas with respect to taxes on the sale and use of international air transport the imposition of taxes on the sale or use of international air transport tends to retard its further development by increasing its costs to the operator (as in the case of taxes on gross receipts or turnover), to the shipper (as in the case of taxes on cargo air waybills) and to the traveller (as in the case of taxes on tickets), and moreover, subjects the traveller to considerable inconvenience (as in the case of head taxes, and embarkation and disembarkation taxes)."
"3. With respect to taxes on the sale and use of international air transport: each Contracting State shall reduce to the fullest practicable extent and make plans to eliminate as soon as its economic conditions permit all forms of taxation on the sale or use of international transport by air, including taxes on gross receipts of operators and taxes levied directly on passengers or shippers;
4. Each Contracting State shall notify the Organization of the extent to which it currently levies taxes on international air transport and of the extent to which it is prepared to take action in accordance with the principles of this Resolution, and thereafter keep the Organization informed of any subsequent changes in its position vis-à-vis the resolution; and
5. The information thus received shall be published and transmitted to all Contracting States."
As can be seen, there is no hint here that any such taxes have been imposed in breach of Article 15, or that their abolition is required by it. The UK Government duly notified the ICAO of its imposition of APD; no complaint or challenge to its doing so has been forthcoming. The Commentary on the Resolution is no less inconsistent with the Claimants case. The Council's objection to taxes such as APD is explained at paragraph 17:
"The same effect of an increase in the cost of air travel can be ascribed to other taxes, sometimes levied upon international air travellers at times of embarkation and disembarkation. In addition to raising the cost of travelling by air, these latter taxes, when collected at the last moment, have the added advantage of causing inconvenience to the traveller by requiring him or her, for example, to check in earlier for his or her embarkation, to obtain additional local currency, etc."
In other words, the objection to such taxes is that they act as a deterrent to travel by air. Again, it is not suggested that they are unlawful under the Convention.
"In the near future, we will further work on and pursue the project of a solidarity contribution levied on air tickets for global sustainable development as supported by Brazil, Chile, France and Germany. The objective of this project is to combat hunger and poverty and finance global sustainable development, including the fight against HIV/AIDS and other pandemics.
The mechanism would be based on a small solidarity contribution levied on plane tickets issued to passengers departing from participating countries. In doing so, each participating country could determine, according to national priorities and taking into account economic, social and ecological criteria as appropriate, a differentiation between first/business and economy class tickets as well as domestic and international flights. The different capacities of developed and developing countries should be taken into account. The contribution should be set at levels that would minimize impacts on airlines, tourism industry and travellers.
From a legal point of view, the mechanism would work as a conjunction of nationally applied and internationally coordinated contributions. Participating countries would spell out the modalities of their cooperation, in accordance with domestic legislation.
It was agreed that the broadest possible participation by a critical mass of countries should be sought in order to minimize any possible remaining effect on competition and enhance the effectiveness of the proposed mechanism. For the same reasons, passengers in transit should be exempted from the solidarity contribution.
We commit ourselves to work further on and support pursuing the project of solidarity contributions, first of all a solidarity contribution levied on air tickets. We welcome the French proposal to host a high level meeting on this initiative by February 2006 and the commitment by some countries to pave the way by establishing such a contribution on air tickets as soon as possible in 2006.
We remain fully committed to the fight against hunger and poverty as a priority in the international agenda. We believe that innovative sources of financing will be an essential tool in this effort. We strongly hope that all countries and institutions, which share our ambition, will join us in this endeavour."
"a) The principle of innovative sources of financing is widely supported and a group of pioneering countries have undertaken to implement an air-ticket solidarity contribution.
The principle of innovative sources of financing is now receiving support from a large part of the international community, given that 79 countries … backed the declaration of 14 September 2005 which encourages further work on an international solidarity contribution. The signatories include several European countries (Germany, United Kingdom, Spain, Estonia, Austria, Sweden, Luxembourg) and major emerging countries (Brazil, India). Developing countries have high expectations of this initiative: 28 of the 47 African countries supported the declaration of 14 September 2005, and it was favourably received by five others.
At the European level, the European Commission highlighted all the advantages of this mechanism - including the ease with which it can be implemented - in its recent staff working paper of 1 September 2005. The new German government supports the principle of innovative sources of financing for development and, along with Spain, is part of the group of six working on this issue (Algeria, Brazil, Chile, France, Germany, Spain). The United Kingdom will allocate some of the revenue from its existing air passenger duty to health development projects, mainly programmes to buy HIV/AIDS, tuberculosis and malaria drugs. Other European countries have given encouraging signs. Norway in particular has announced that it is considering the introduction of an air-ticket solidarity contribution.
Lastly, President Lagos of Chile announced in September that his country plans to levy a solidarity contribution of $2 on all international flights from 2006.
b) Progress report on the French initiative: details were given on revenues (contribution implementation conditions) and expenditure (allocation of revenues).
Revenues: France will start applying this air-ticket contribution on 1 July 2006. The law passed by Parliament on 22 December 2005 sets out the following rate caps for all flights departing from the French territory: €1 in economy class and € 10 in first and business class for domestic and intra-European flights (European Economic Area), €4 and €40 on other flights, depending upon the travel class. The actual tax rates will be laid down in early 2006 by government decree. These capped rates are expected to generate revenue of up to €200 million per year."
The travaux préparatoires
"Aircraft in transit and persons and property thereon shall not be subject to any dues, fees or charges imposed on the right of transit (including entry and exit). In so far as any fees, dues or charges may be levied in connection with any landings made by aircraft in transit such dues, fees, or charges shall not be levied under any conditions other than those applicable to national aircraft or to aircraft of the most favoured nation, and shall not be greater than those imposed upon national aircraft or aircraft of the most-favoured nation."
"Airport and similar charges. Subject to the provisions of Article II section 5 (Document 402), and subject to such conditions as may be declared and published by the State in whose territory the airport is situated, every airport in a contracting State which is open to public use by its national aircraft shall likewise be open uniformly to the aircraft of all the other contracting States. The like uniform conditions shall apply to the use, by aircraft of every contracting State, of all air navigation facilities, including radio and meteorological services, which may be provided for public use for the safety and expedition of air navigation.
Each contracting State shall establish scales of charges for the use of such airports and air navigation facilities which shall be uniformly applicable to the aircraft of all other States, and which shall be published and communicated to the International Air Organization. No fees, dues or other charges shall be imposed by any contracting State in respect solely of the right of transit over or entry into or exit from its territory of any aircraft of a contracting State or persons or property thereon."
Other authorities on the meaning of Article 15
"3.10 Considering that Article 15 includes the basic rules regarding costs in connection with public airports and air travel facilities; that the defence rightly observes that it prohibits foreign and national aircraft from being treated differently; that it however also does more; that in the last paragraph it not only orders a contracting State or of person or property in it, but prohibits altogether the establishment of tariffs, dues or other costs, which are just imposed for flying over, into or out and which have nothing to do with the use of the airport and airport facilities;
Considering that, therefore, this last paragraph is essentially to be read and understood, not in the first place as a measure to ensure that international air transport services can be established on the basis of equal opportunities, but as a measure to ensure that the air transport services – with the introduction of the Agreement on 7 December 1994- "can operate in a sound and economic way".
3.12 Considering that, nevertheless, in order not to consider the contested tax as a tariff, due or other cost prohibited by Article 15, last paragraph, the defendant points out that the local tax is not based on each landing or each takeoff, or after each landing or takeoff; that these observations are of no importance; that they are only relevant if one were to adopt the view that Article 15, last paragraph, can affect only an indirect tax, because the disputed tax must be described as a direct tax; that this view also lacks grounds; that Article 15, last paragraph, prohibits taxes solely for the right to fly over, fly into or out of, irrespective of whether this flying over, into or out of must be regarded as merely coincidental or as a durable situation, and thus irrespective of whether the taxes are able to be regarded as an indirect or a direct tax respectively;
Considering also that the arguments that the taxable act of operating aircraft "is without any reference to 'entry into', 'transit over' or 'exit from'", and that the number of passengers departing "is used only as an index of the taxable operation" do not convince; that, as seen, the disputed tax on the operation of aircraft is essentially to be identified as a tax on flying out of and flying into the district; that the index used in this connection is in no way unimportant, but just as meaningful; since the basis for calculation must correspond to the reason why the tax becomes payable; that according to Article 4, the tax is calculated on the number of passengers who, during the year prior to the financial year, leave the airport in the territory of the district, at a rate of 12 Francs per departing passenger, that in this way the Article supports and confirms the conclusion that the tax is aimed specifically (among other things) at flying out of the district…"
Conclusion on Article 15
Article 14 of the Single European Sky Service Provision Regulation
"(1) Implementation of the common transport policy requires an efficient air transport system allowing safe and regular operation of air transport services, thus facilitating the free movement of goods, persons and services.
(2) At its Extraordinary Meeting in Lisbon on 23 and 24 March 2000, the European Council called on the Commission to put forward proposals on airspace management, air traffic control and air traffic flow management, …
(3) Smooth operation of the air transport system requires a consistent, high level of safety in air navigation services allowing optimum use of Europe's airspace and a consistent, high level of safety in air travel, in keeping with the duty of general interest of air navigation services, including public service obligations. It should therefore be carried out to the highest standards of responsibility and competence.
(4) The single European sky initiative should be developed in line with the obligations stemming from the membership of the Community and its Member States of Eurocontrol, and in line with the principles laid down by the 1944 Chicago Convention on International Civil Aviation."
"1. The objective of the single European sky initiative is to enhance current safety standards and overall efficiency for general air traffic in Europe, to optimise capacity meeting the requirements of all airspace users and to minimise delays. In pursuit of this objective, the aim of this Regulation is to establish a harmonised regulatory framework for the creation of the single European sky by 31 December 2004.
3. The application of this Regulation and the measures referred to in Article 3 shall be without prejudice to the rights and duties of the Member States under the 1944 Chicago Convention on International Civil Aviation."
"4. "air navigation services" means air traffic services; communication, navigation and surveillance services; meteorological services for air navigation; and aeronautical information services;
11. "air traffic services" means the various flight information services, alerting services, air traffic advisory services and ATC services (area, approach and aerodrome control services); .."
"(4) In order to create the single European sky, measures should be adopted to ensure the safe and efficient provision of air navigation services consistent with the organisation and use of airspace as provided for in Regulation (EC) No 551/2004 of the European Parliament and of the Council of 10 March 2004 on the organisation and use of the airspace in the single European sky (the airspace Regulation). The establishment of a harmonised organisation for the provision of such services is important in order to respond adequately to the demand of airspace users and to regulate air traffic safely and efficiently.
(5) The provision of air traffic services, as envisaged by this Regulation, is connected with the exercise of the powers of a public authority, which are not of an economic nature justifying the application of the Treaty rules of competition.
(19) Charging conditions applying to airspace users should be fair and transparent.
(20) User charges should provide remuneration for the facilities and services provided by air navigation service providers and Member States. The level of user charges should be proportionate to the cost, taking into consideration the objectives of safety and economic efficiency.
(21) There should be no discrimination between airspace users as to the provision of equivalent air navigation services.
(22) Air navigation service providers offer certain facilities and services directly related to the operation of aircraft, the costs of which they should be able to recover according to the 'user pays' principle, which is to say that airspace users should pay for the costs they generate at, or as close as possible to, the point of use.
(23) It is important to ensure the transparency of the costs to which such facilities or services give rise. Accordingly, any changes made to the system or level of charges should be explained to airspace users; such changes or investment proposed by air navigation service providers should be explained as part of an exchange of information between their management bodies and airspace users.
(24) There should be scope for modulating charges that contribute to maximising system-wide capacity. Financial incentives may be a useful way of accelerating the introduction of ground-based or airborne equipment that increases capacity, of rewarding high performance or of offsetting the inconvenience of choosing less desirable routings.
(27) The establishment and imposition of charges on airspace users should be reviewed by the Commission on a regular basis, in cooperation with Eurocontrol, and with national supervisory authorities and airspace users."
"Scope and objective
1. Within the scope of the framework Regulation, this Regulation concerns the provision of air navigation services in the single European sky. The objective of this Regulation is to establish common requirements for the safe and efficient provision of air navigation services in the Community.
2. This Regulation shall apply to the provision of air navigation services for general air traffic in accordance with and within the scope of the framework Regulation."
"In accordance with the requirements of Articles 15 and 16, a charging scheme for air navigation services shall be developed that contributes to the achievement of greater transparency with respect to the determination, imposition and enforcement of charges to airspace users. This scheme shall also be consistent with Article 15 of the 1944 Chicago Convention on International Civil Aviation and with Eurocontrol's charging system for en route charges."
"(1) The Commission is required to establish a common charging scheme for air navigation services throughout the Community.
(3) The development of a common charging scheme for air navigation services provided during all phases of flight is of the utmost importance for the implementation of the single European sky. The system should contribute to the achievement of greater transparency with respect to the determination, imposition and enforcement of charges to airspace users. The system should also encourage the safe, efficient and effective provision of air navigation services to the users of air navigation services that finance the system and stimulate integrated service provision.
(6) The common charging scheme should be consistent with Article 15 of the 1944 ICAO Chicago Convention on International Civil Aviation.
(16) Charges to be imposed on airspace users should be established and applied in a fair and transparent manner, after consultation of users. Such charges should be reviewed on a regular basis."
"Principles of the charging scheme
1. The charging scheme shall reflect the costs incurred either directly or indirectly in the provision of air navigation services.
5. The charging scheme shall provide transparency and consultation on the cost bases and on the allocation of costs among different services."
In accordance with articles 14, 15 and 16 of the Service Provision Regulation, Member States shall comply with common principles when setting air navigation charges to airspace users.
These principles must be consistent with Article 15 of the 1944 Chicago Convention on International Civil Aviation and with Eurocontrol's charging system for route charges. They aim at contributing to the achievement of greater transparency with respect to the determination, imposition and enforcement of air navigation charges to airspace users.
…The European Commission considers the development of such common air navigation charges scheme to be of utmost importance for implementation of the Single European Sky. …"
(a) The issues in summary
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."
The issue as to the admissibility of Parliamentary material
"Freedom of speech – That the freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament."
"In addition to Article 9 itself, there is a long line of authority which supports a wider principle, of which Article 9 is merely one manifestation, viz. that the courts and Parliament are both astute to recognise their respective constitutional roles. So far as the courts are concerned they will not allow any challenge to be made to what is said or done within the walls of Parliament in performance of its legislative functions and protection of its established privileges."
See Prebble v Television New Zealand Ltd  1 AC 321 at p. 332 per Lord Browne-Wilkinson, re-affirmed recently by the Judicial Committee of the Privy Council in Toussaint v. The Attorney General of Saint Vincent and the Grenadines  UKPC 48, the judgment in which was delivered on 16 July 2007, the day before the hearing of the present proceedings began. In the above citation too, the key word is "challenge". Lord Browne-Wilkinson added:
"Their Lordships wish to make it clear that if the defendant wishes at the trial to allege the occurrence of events or the saying of certain words in Parliament without any accompanying allegation of impropriety or any other questioning there is no objection to that course."
(a) those cases do not deal with the question of whether (i) statements made in evidence to Select Committees by officials or others can be adduced in evidence or (ii) the extent to which it is appropriate or permissible to adduce the reports of such Committees for the purposes of supporting or defending a claim;
(b) the Claimants are not challenging a decision of a Minister (or of the Executive generally). Their challenge is to an Act of Parliament. [Certain of the] statements to which [the Claimants] refer were made by the then Chancellor of the Exchequer and one of his officials in the course of giving evidence to the Treasury Select Committee. Such statements cannot be equated with Parliament's reasons for enacting a particular legislative provision;
(c) unlike Mr Toussaint, the Claimants are not simply seeking to refer to statements made during proceedings in Parliament without questioning or challenging them. The evidence of Mr Cooper (which the Claimants have not disclaimed reliance on) is that, in giving evidence to the Treasury Select Committee, a civil servant seemed to have "forgotten" a point of significance … and that the then Lord Chancellor of the Exchequer, in giving his evidence, seemed to have "forgotten" or "ignored" further points of significance …, made an "inaccurate" claim and made a statement that was "not correct" and based upon a confusion. The Claimants are thus seeking to question and challenge the various statements at issue.
A1P1: the parties' contentions in summary
(a) The Government made the decision to increase APD without taking into account the Package Travel Regulations, and therefore in ignorance of the impact of the increase on tour operators.
(b) The environmental aim of the increase, i.e. to reduce air travel, manifestly could not be accomplished in relation to existing bookings of package holidays. Package holiday passengers with existing bookings would not bear the increase (or could at most be liable for the relatively small part exceeding 2 per cent of the package price if permitted by regulation 11(3)(i) of the Package Travel Regulations). A tax borne by tour operators in relation to existing bookings could not have the effect of reducing air travel.The requirement for an exemption or postponement was demonstrated or supported by the postponement of its introduction in 1994 and the deferrals made in 1996 and 2000: see paragraphs 14, 17 and 18 above.
(c) It would have been legislatively and administratively easy to have exempted existing bookings.
(d) The increase was retrospective. For the purposes of A1P1, a more stringent test is applied to retrospective taxation than is applicable to tax measures that apply to future transactions only.
"The Government has put forward no sufficient reason for imposing the £50 million burden upon tour operators. Nor could it. The object of the increase was to increase a tax on airlines that would be passed on to and alter the behaviour of the passengers.
"… In truth, the Government had no intention of taxing tour operators at all."
(a) If the effect of the Regulations had originally been ignored when the decision to increase APD had been made, their effect was taken into account by the Government when it decided to make no change to its original decision.
(b) The environmental benefits of the tax were not the only reason for its increase: the raising of revenue was an important consideration, and the exclusion of pre-booked flights would have substantially reduced that revenue, by, as the Claimants themselves assert, between £40 and £50 million.
(c) Previous postponements of the introduction or increase of APD were not comparable.
(d) It would have been administratively and legislatively difficult to exempt existing bookings.
(e) The increase was not retrospective: it applied only to future flights.
(f) The risk of the increase in APD was a risk of the tour operators' business that they could be expected to deal with.
(g) Under the Convention, an especially wide latitude was permitted to the executive and legislature in determining whether tax measures infringe A1P1. The decision to increase APD and not to exempt existing bookings was within the margin of appreciation of the Government.
AIP1: discussion (a) The approach of the Court
"55. As the Court has often held, Article 1 (P1-1) guarantees in substance the right of property. It comprises three distinct rules. The first, which is expressed in the first sentence of the first paragraph and is of a general nature, lays down the principle of peaceful enjoyment of property. The second, in the second sentence of the same paragraph, covers deprivation of possessions and makes it subject to certain conditions. The third, contained in the second paragraph, recognises that the Contracting States are entitled to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.
However, the three rules are not "distinct" in the sense of being unconnected: the second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule (see, among many other authorities, the AGOSI v. the United Kingdom judgment of 24 October 1986, Series A no. 108, p. 17, para. 48)."
"In the present case the Government took the view in the Pre Budget Report that APD rates should be raised in recognition of the impact aviation has on the environment. The Government has for a long time endorsed the 'polluter pays' principle, and it has raised APD rates on this occasion with the objective of reducing the damage which aviation causes to the environment and at the same time providing resources for the Government's spending priorities such as public transport and the environment. The Government's econometric analysis suggests that, overall, the increased rates will lead to reductions in air travel and that this change will deliver considerable carbon savings year on year. For example by 2010/11 the change will have the effect of saving approximately 0.3 million tonnes of carbon emissions per annum."
"whether: (i) the legislative objective is sufficiently important to justify limiting a fundamental right; (ii) the measures designed to meet the legislative objective are rationally connected to it; and (iii) the means used to impair the right or freedom are no more than is necessary to accomplish the objective."
"… the courts will accord to Parliament and ministers as the primary decision-makers, an appropriate degree of latitude. The latitude will vary according to the subject matter under consideration, the importance of the human right in question and the extent of the encroachment on that right."
"… the object and purpose of Article 1 (P1-1) … is primarily to guard against the arbitrary confiscation of property."
The encroachment on the Claimants' rights under A1P1 in this case does not approach confiscation, and does not demand anxious scrutiny by the Court. Far from it, in the present context:
"The Court, finding it natural that the margin of appreciation available to the legislature in implementing social and economic policies should be a wide one, will respect the legislature's judgment as to what is "in the public interest" unless that judgment be manifestly without reasonable foundation."
See paragraph 46 of the judgment in James.
"60. As follows from the previous paragraph, the present case concerns the right of States to enact such laws as they deem necessary for the purpose of "securing the payment of taxes".
In passing such laws the legislature must be allowed a wide margin of appreciation, especially with regard to the question whether - and if so, to what extent - the tax authorities should be put in a better position to enforce tax debts than ordinary creditors are in to enforce commercial debts. The Court will respect the legislature's assessment in such matters unless it is devoid of reasonable foundation."
AIP1: discussion (b): the facts
"The points raised (by the Claimants) were carefully considered by Ministers and officials but it was not considered appropriate to change the decision to increase the rate of APD as regards all flights departing on or after 1 February 2007 …."
In other words, the points raised had not been considered when the decision was first made.
"The PBR policy decision was quite clear – Ministers had decided that the change would apply to flights on or after 1 February and this was fixed."
"The objectives of APD are to protect the environment, broaden the tax base and raise revenue."
"… the revenue impacts of making any exemption for flights booked before PBR (the Pre-Budget Report of 6 December 2006) were also taken into account as a factor in considering whether to create such an exemption."
Article 49 EC
The issues in summary
"Within the framework of the provisions set out below, restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended."
"224. The effect of the increase in APD is to 'impede the activities' of EU service providers by making it less attractive for UK tour operators to purchase their services for sale as part of a package holiday. A package holiday typically includes flights, accommodation, and local services such as sightseeing excursions, evening entertainment, and ski-passes for winter holidays … Even though it is not a tax on the purchase of hotel accommodation itself, it renders holidays in other Member States less attractive because it will 'influence the price of' the holiday; see Case C 92/01 Stylianakis  ECR I-01291 paragraph 28. It accordingly impedes the activities of the tour operators in buying and reselling such services."
"Article 49 EC is not engaged, for the following reasons: -
a. The increase in APD applies without distinction to all aircraft, whether operated by national or non-national airlines, and is levied at exactly the same rate on flights to EEA destinations as it is on flights to UK destinations.
b. It is a tax measure, not directed at regulating trade in other Member States, and it falls within Member States' discretionary area of freedom to set its own taxes.
c. The measure affects in the same way the provision of services between Member States (cross-border provision) and within one Member State (national provision).
d. Any effect on the provision of EU services is likely to be minor, unpredictable and indirect."
Discussion: preliminary considerations
"The increase in APD is contrary to the freedom to provide services protected by Article 49 EC."
(the italics are mine) set out reasons why the tax itself constituted a breach. The explanation in paragraph 219 of their skeleton argument for so limiting their case was that "the proportionality challenge in these proceedings relates solely to the reasons for the increase in APD". I did not find this enlightening in the context of the Article 49 claim. During the hearing, I put to Mr Haddon-Cave that I could not see a principled basis for confining this ground of challenge to the increase. His initial response was that it was only in relation to the increase that the Claimants could show that the Government intended to discourage travel by air. However, whether a measure is a "restriction on freedom to provide services within the Community" must, it seemed to me, be judged objectively on the basis of the effects of the measure in question, rather than by reference to the intentions of the Government. When I raised this, it led to a wavering by the Claimants of their position, and ultimately to their contending that their challenge under this head went to the entirety of the tax.
"The modalities of the introduction of the increased APD are not proportionate to (or even justifiable by) the objective of the increased APD (since the increase in APD will have no impact on package holidays already sold). By consequence, these modalities violate the tour operators' right to provide services in combination with general principles of EC law, such as legal certainty and protection of legitimate expectations."
The italics are mine. However, as has been seen, in their skeleton argument (and equally in their Re-Amended Grounds of Challenge) the Claimants rely on an alleged impediment to the activities of EU service providers. Mr Anderson commented that the Claimants rely on an alleged wrongful restriction on the freedom of service providers who are not before the Court, and have not put any evidence before the Court. In this respect, he suggested that the present claim is unique. The point was put thus in the Treasury's Detailed Grounds for contesting the claim:
"The Claimants have not indicated how providers of package holidays are entitled to rely parasitically upon the alleged rights of others who are not parties to the action and appear to have made no attempt to assert those alleged rights."
"217. But the core business of tour operators involves buying services from other Member States and reselling those services as part of holidays sold to customers in the UK. Around 65% of package holidays sold by UK tour operators are to EU destinations (the figure is higher in the Summer season when around 70% of all reported sales are to EU destinations, compared with 55% in the Winter season)…. TUI estimates that 80% of its packages are to destinations within the EU: … As part of those holidays, tour operators provide accommodation and other tourist services which they purchase in the destination country such as sight-seeing excursions, evening entertainment, ski passes for winter holidays etc... Those services are sourced by the tour operators from service providers which reside in those other Member States of the EU ('the EU service providers').
218. Accordingly, the Claimants have a sufficient interest in the matter to bring a challenge on this ground by way of judicial review proceedings."
Article 49: jurisprudence and discussion
"It follows that the freedom to provide services includes the freedom, for the recipients of services, to go to another Member State in order to receive a service there, without being obstructed by restrictions, even in relation to payments and that tourists, persons receiving medical treatment and persons travelling for the purpose of education or business are to be regarded as recipients of services."
See also the judgment of the Grand Chamber in Watts v Bedford Primary Care Trust, Secretary of State for Health (2006) (case C-372/04). It is on this basis that the Claimants assert a restriction on their rights: i.e., their rights to contract for the services of EU service providers. (This assumes that the tour operators are the recipients of those services, although it is arguable that it is not they but their customers who are the recipients.)
"Article 3(1) of Council Regulation (EEC) No 2408/92 of 23 July 1992 on access for Community air carriers to intra-Community air routes precludes a measure adopted by a Member State, such as that at issue in the main proceedings, which imposes on, for the most part, flights to other Member States higher airport tax than that applicable to domestic flights within that Member State unless it is shown that those taxes compensate airport services necessary for the processing of passengers and that the cost of those services provided to passengers flying to other Member States is proportionately higher than the cost of those services necessary for the processing of passengers on domestic flights."
"… it is proposed that the Court reply to the question referred to it as follows:
Article 59 of the EC Treaty (now, after amendment, Article 49 EC) and Article 3(1) of Council Regulation No 2408/92 are to be interpreted as precluding the application of a national provision which imposes a differentiated fiscal charge on domestic and intra-Community flights, with the direct result that an amount of tax is charged on intra-Community flights which is double that charged on flights within the Member State."
"It should be noted in this connection that according to well-established case-law, Article 49 EC precludes the application of any national rules which have the effect of making the provision of services between Member States more difficult than the provision of services purely within a Member State (Case C-381/93 Commission v France  ECR I-5145, paragraph 17; Kohll, paragraph 33; and Smits and Peerbooms, paragraph 61)."
"Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States."
"Article 30 of the Treaty
23. The national court enquires about the compatibility of the Italian legislation with Article 30 in so far as it requires Italian vessels to carry costly equipment. It asks itself whether this makes imports of chemical products into Italy more expensive and therefore creates an obstacle prohibited by that article.
24. On this point, it is sufficient to observe that legislation like the legislation in question makes no distinction according to the origin of the substances transported, its purpose is not to regulate trade in goods with other Member States and the restrictive effects which it might have on the free movement of goods are too uncertain and indirect for the obligation which it lays down to be regarded as being of a nature to hinder trade between Member States (see the judgment in Case C-69/88 Krantz v Ontranger der Directe Belastingen  ECR I-583, paragraph 11, and the judgment in Case C-93/92 CMC Motorradcenter v Pelin Baskiciogullari  ECR I-5009, paragraph 12).
25. Article 30 does not therefore preclude legislation like the national legislation in question."
"What I derive from these authorities (and especially from Graf Case C-190/98  ECR I-493, which is particularly instructive) is that a neutral, non-discriminatory national measure will not contravene the articles relating to freedom of movement unless it has a direct and demonstrable inhibiting effect on the particular right which is asserted."
"If the analysis of Robert Walker LJ is applied to the present case, two conclusions emerge. First, the hunting ban does not have a direct inhibiting effect on the rights asserted, of the English providers such as Mrs Johnson to supply services, and of persons in other member states to receive such services. What it does is to render the market for such services within a particular member state less attractive, both to English and foreign providers and receivers. …"
"34. By his question the Giudice di pace in essence asks the Court whether Article 49 EC precludes the levying of a tax such as the municipal tax on advertising introduced by Legislative Decree No 507/93, which is imposed on inter alia bill-posting services of a cross-border nature on the basis of the place of establishment of either the provider or the recipient of the services.
35. According to the Court's case-law, Article 49 EC requires the elimination of any restriction of the freedom to provide services, even if it applies to national providers of services and to those of other Member States alike, when it is liable to prohibit or otherwise impede the activities of a provider of services established in another Member State where he lawfully provides similar services. (see to that effect Case C-262/02 Commission v France  ECR I-0000, paragraph 22, and Case C-429/02 Bacardi  ECR I-0000, paragraph 31, and the decisions cited there).
36. Furthermore, it is to be borne in mind that the Court has recognised that a national tax measure restrictive of the freedom to provide services could constitute a prohibited measure, whether it is applied by the State itself or by a local authority (see, to that effect, Case C-17/00 De Coster  ECR I-9445, paragraphs 26 et 27).
37. With regard to the question of whether the levying by municipal authorities of a tax such as the advertising tax constitutes an impediment incompatible with Article 49 EC, it must first of all be noted that such a tax is applicable without distinction to any provision of services entailing outdoor advertising and public bill-posting in the territory of the municipality concerned. The rules on the levying of this tax do not, therefore, draw any distinction based on the place of establishment of the provider or recipient of the bill-posting services or on the place of origin of the goods or services that form the subject-matter of the advertising messages disseminated.
38. Next, such a tax is applied only to outdoor advertising activities involving the use of public space administered by the municipal authorities and its amount is fixed at a level which may be considered modest in relation to the value of the services provided which are subject to it. In those circumstances, the levying of such a tax is not on any view liable to prohibit, impede or otherwise make less attractive the provision of advertising services to be carried out in the territory of the municipalities concerned, including the case in which the provision of services is of a cross-border nature on account of the place of establishment of either the provider or the recipient of the services.
39. It follows from the foregoing considerations that Article 49 EC must be interpreted as not precluding the levying of a tax such as the municipal tax on advertising imposed by Legislative Decree No 507/93."
"26. By its first question the referring court is seeking to ascertain whether Article 59 of the Treaty must be interpreted as precluding the introduction, by legislation of a national or local authority, of a tax on mobile and personal communications infrastructures used to carry on activities provided for in licences and authorisations.
27. Although, as Community law stands at present, direct taxation does not as such fall within the scope of the Community's competence, Member States must nevertheless exercise their retained powers consistently with Community law (see Case C-279/93 Schumacker  ECR I-225, paragraph 21; Case C-436/00 X and Y  ECR I-10829, paragraph 32, and Case C-9/02 De Lasteyrie du Saillant  ECR I-2409, paragraph 44).
28. In the field of freedom to provide services the Court has already recognised that a national tax measure restricting that freedom may constitute a prohibited measure, whether it was adopted by the State itself or by a local authority (see, to that effect, Case C-17/00 De Coster  ECR I-9445, paragraphs 26 and 27).
29. According to the Court's case-law, Article 59 of the Treaty requires not only the elimination of all discrimination on grounds of nationality, against providers of services who are established in another Member State, but also the abolition of any restriction, even if it applies without distinction to national providers of services and to those of other Member States, which is liable to prohibit or further impede the activities of a provider of services established in another Member State where he lawfully provides similar services (Case C-43/93 Vander Elst  ECR I-3803, paragraph 14, and De Coster, cited above, paragraph 29).
30. Furthermore, the Court has already held that Article 59 precludes the application of any national rules which have the effect of making the provision of services between Member States more difficult than the provision of services purely within one Member State (De Coster, cited above, paragraph 30 and the case-law cited, and paragraph 39).
31. By contrast, measures, the only effect of which is to create additional costs in respect of the service in question and which affect in the same way the provision of services between Member States and that within one Member State, do not fall within the scope of Article 59 of the Treaty.
32. As regards the question whether the levy by municipal authorities of taxes such as those in question in the main proceedings amounts to a restriction incompatible with Article 59, it is necessary to point out that such taxes apply without distinction to all owners of mobile telephone installations within the commune in question, and that foreign operators are not, either in fact or in law, more adversely affected by those measures than national operators.
33. Nor do the tax measures in question make cross-border service provision more difficult than national service provision. Admittedly, introducing a tax on pylons, masts and antennae can make tariffs for mobile telephone communications to Belgium from abroad and vice versa more expensive. However, national telephone service provision is, to the same extent, subject to the risk that the tax will have an impact on tariffs.
34. It is appropriate to add that there is nothing in the file to suggest that the cumulative effect of the local taxes compromises freedom to provide mobile telephony services between other Member States and the Kingdom of Belgium.
35. The answer to the first question must therefore be that Article 59 of the Treaty must be interpreted as not precluding the introduction, by legislation of a national or local authority, of a tax on mobile and personal communications infrastructures used to carry on activities provided for in licences and authorisations, which applies without distinction to national providers of services and to those of other Member States and affects in the same way the provision of services within one Member State and the provision of services between Member States."
Justification and proportionality
"249. First, there are plenty of methods open to the Government of raising revenue which do not require any restriction on the freedom to provide services, whether or not that revenue is ultimately spent on protecting the environment.
250. Secondly, the income generated by APD is not "allocated to initiatives or compensatory devices to protect the environment". … The tax is not in any real sense linked to environmental objectives, any more than income tax is.
251. Thirdly, the tax cannot be said to be the least restrictive way of achieving the result of reducing CO2 emissions because the tax lacks a coherent connection to the level of those emissions."