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Summary: The golden age of cheap travel and transportation fades into history as adverse weather changes forces the world into action.
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The world suffers another year of wild weather with Europe again experiencing an extremely hot summer, setting off panic alarms in capitals around the world. With the international aviation and shipping industries enjoying substantial tax privileges, they become the targets of a new Global Transportation Tax (GTT) that introduces a global ticket tax on aviation and a capital “tonnage” tax on shipping with the price linked to carbon emission footprints.
The new tax charge is set to $50/ton of CO2 emissions which is twice previous proposed levels and significantly above the 2018 average of €15/ ton under the European Union’s Emissions Trading System. The new GTT pushes up air travel ticket prices and maritime freight, increasing the general price level as the new tax is passed on to consumers.
In October 2016, the International Civil Aviation Organization agreed on a resolution for a global market-based measure to address carbon emissions from aviation. In April 2018, the International Maritime Organization announced a target to cut maritime carbon emissions by 50% by 2050. With alarm bells going off everywhere over climate change, politicians enforce GTT in a drastic move that bypasses voluntary carbon trading schemes and industry initiatives in order to move more quickly.
The US and China have previously contested fuel taxes on aviation, citing the 1944 Chicago Convention on International Civil Aviation, but China changes its stance as a natural progression of its fight against pollution. This forces the US to reluctantly join forces in a global transportation tax on aviation and shipping.
Stocks in the tourism, airline and shipping industries plunge on increased uncertainty and lower growth.
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