Wednesday, 24 June 2009
Dáil Eireann Debate
93. Deputy Thomas P. Broughan asked the Minister for Finance if he will review the operation of the €10 air travel tax in view of the ongoing aviation and travel job losses and the reduction in aviation services which have been announced for winter 2009; and if he will make a statement on the matter. [25298/09]
Minister for Finance (Deputy Brian Lenihan): As the Deputy is aware, I announced in Budget 2009 that an air travel tax would come into force in respect of passengers departing from Irish airports on and from 30 March 2009. A general rate of €10 per passenger would apply, with a lower rate of €2 for shorter journeys.
The Finance (No. 2) Act 2008 confirms the introduction of an air travel tax from 30 March 2009. However, I took account of concerns raised by the regional airports particularly those on the western seaboard. The lower rate of €2 will apply to departures from any Irish airport where the destination is 300 km or less from Dublin airport. This means that all Irish departures to locations such as Manchester, Liverpool and Glasgow will be subject to the €2 rate.
Ireland is not unique in regard to applying a tax on air travel. Other countries within the EU apply similar taxes such as the UK and France, as do Australia and New Zealand. The proposed rates for the Irish air travel tax are not unreasonable both for shorter and longer journeys, when compared to rates in other countries.
It should be recognised that tourists will only be subject to the tax on their return journey. The additional €10 or €2 in the context of a much larger purchasing decision involving travel, hotel expenditures etc. should not have much effect on tourist numbers. I appreciate the airline industry continues to go through a difficult period. However, this difficult trading period arises primarily from weak world economic activity and the spike in oil prices in 2008. Oil prices, despite increasing recently, have halved from the all-time high prices experienced last year.
It should be noted that at present the decline in air travel is an international phenomenon and as a result aviation services are contracting on a global basis. Indeed the decline in the number of people travelling is also evident in those countries where there is no air travel tax in place.
We currently face significant financial challenges and the air travel tax is an important revenue raising measure. I tried to be as fair as possible in looking at areas for additional tax revenues. It is also worth noting that fuel used by commercial airlines is completely exempt from tax, so it is a sector that already has considerable preferential treatment. I have no plans to review the air travel tax.
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