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Study Points Out High Air Travel Taxes

by Robert Lee, Tax-News.com, London

25 June 2015


Airlines and air passengers around the world face an increasingly complex web of taxes and airport charges that increase the cost of flying and inhibit economic competitiveness, according to a new study by UHY, the international accounting and consultancy network.

UHY calculated that the average levy imposed on short haul flights in the country of departure globally is now USD23, and USD53 for long haul flights. These can be more than 10 percent of the total cost of flying.

UHY points out that "these additional costs damage tourism, penalize small and medium-sized enterprises trying to expand overseas, disadvantage remote regional cities, and chip away at labor mobility." Although taxes on flying are often billed as "green taxes," UHY also notes that it is exceptionally rare for the revenue they raise to be ring-fenced for environmental protection projects.

The study finds that the most expensive tax is for long haul flights departing from a Russian airport (of USD272), where, unlike in many other countries, airline tickets are subject to sales taxes. The highest taxes of any G7 economy are in the United States, which imposes USD23 in taxes on a short haul flight.

Within the European Union, the United Kingdom still has the highest flight taxes. An adult with an economy short haul ticket flying from a UK airport will pay USD20 in tax. For a first or business class ticket, the amount of tax paid would be even higher at USD41. For an economy long haul ticket, the tax paid could reach USD111.

Many smaller European countries do not impose taxes on individual passengers, including Ireland, Slovakia, and Belgium. In many cases there has been intense lobbying by local airports and business groups to keep taxes on flying to a minimum to deter travelers from using airports in neighboring countries with lower taxes.

UHY adds that, on top of taxes and compulsory payments imposed by government bodies, there are often additional airport fees levied on individual passengers, while airlines also add their own charges such as "fuel charges" that could simply be included in the cost of a flight.

UHY Chairman Ladislav Hornan said: "For consumers, taxes and airport fees are confusing; they mean the final ticket price is usually a shock."

"An EU study five years ago recommended that all air fares should state simply the basic air fare, airport charges, and government taxes which are levied per passenger, and the total price. That study said that the costs of operating the flight, such as ticketing or fuel, need to be included in the basic air fare."

"Businesses and consumers would greatly benefit if regulators and tax authorities kept aviation taxes low and ensured that charges were more transparent," he concluded.

TAGS: Russia | tax | business | sales tax | air passenger duty (APD) | Belgium | Ireland | aviation | Slovakia | United Kingdom | fees | travel and tourism | United States | European Union (EU) | Europe

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