Ryanair Snubs Ireland Over Tax

by Robert Lee, Tax-News.com, London

19 January 2012

Irish airline Ryanair is to create 1,000 new jobs but not in Ireland, with the country's tax regime thought to be to blame.

The budget airline's fleet is to expand from 270 to 305 aircraft. As a result, the company will create 1,000 new jobs in 2012 for pilots, cabin crew, engineers and sales/marketing people. The jobs will, however, controversially be based in mainland Europe, rather than Ireland where the airline has its headquarters.

It has been reported that the EUR3 (USD3.84) travel tax is partly to blame. Early in 2011, Finance Minister Michael Noonan pledged to scrap the travel tax subject to the conclusion of a deal with airlines to re-instate cancelled routes and restore lost capacity. However, talks collapsed, and the government decided to maintain the tax until at least the spring of 2012, when a further review will be carried out.

Ryanair boss Michael O'Leary and his firm have frequently been vocal in their distaste for the air tax policy of various governments. Earlier this week, the airline announced that it was to charge passengers EUR0.25 to cover the costs of the European Union's (EU) new Emissions Trading Scheme.

It expects costs from the EU's tax to reach between EUR15m and EUR20m this year. Slamming the levy as an "eco-loony tax", Ryanair argued that this "latest EU stealth tax will damage traffic, tourism, European competitiveness and jobs at a time when no other economic block is including aviation in their ETS schemes".

In addition, O'Leary put his name to a letter written to the UK's Chancellor, calling on him to scrap that country's Air Passenger Duty. O'Leary has even threatened to move his personal tax affairs away from Ireland in the past, arguing that while he has 'no problem' paying income tax at 50%, rates over that threshold would simply drive him to leave Ireland.

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