Aviation Industry Slams European Passenger Taxes

by Amanda Banks, Tax-News.com, London

30 October 2008

The International Air Transport Association (IATA) has strongly criticised budget plans in Belgium and Ireland that mimic British and Dutch departure taxes as “collective madness."

Giovanni Bisignani, IATA’s Director General and CEO said: “collective madness is the only way to describe the EUR150 million Irish and EUR132 million Belgian departure tax proposals. Filling budget gaps or financing government investment in the banking industry with gratuitous travel taxes is policy myopia at its worst."

He added: “The timing could not be worse for governments to make mobility more expensive. Look at what has happened in fuel, the biggest cost item for airlines. Even with the recent drop, today’s price is still over 300% more expensive than it was only a few years ago.

“Rather than collective action to squeeze taxpayers, Europe’s governments should be looking to improve European competitiveness. An effective Single European Sky would save 16 million tonnes of CO2 annually and improve the competitiveness of Europe’s skies by over EUR5 billion."

Irish Finance Minister Lenihan announced earlier this month that a new air travel tax will be imposed at a flat charge of EUR10 per passenger, with shorter journeys attracting a EUR2 charge. The levy is due to be introduced in March 2009. This coincided with an announcement in the Belgian budget of a similar measure, which has been justified by the government on environmental grounds.

Last week, the European parliament debated whether to support a proposed EU directive which aims to set common rules for how charges are calculated.

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