Finance Minister rules out two year exemption from Travel Tax

November 5th, 2009 - Pat Breen

Deputy Pat Breen T.D. this week sought a two year exemption for Shannon Airport from the Minister for Finance Brian Lenihan TD due to the current difficulties being experienced by Airlines using Shannon. He also said that it would help to broker a new deal with Ryanair. However, Minister Lenihan has ruled out any exemption for Shannon and is persisting with the Tax.

DÁIL QUESTION
NO 391

To ask the Minister for Finance further to Parliamentary Question No. 234 of 20 October 2009, if he will introduce an exemption in the Finance Bill to exempt airlines using Shannon airport from the air travel tax until 2011 at the earliest in view of the current difficulties facing airlines operating through this airport; and if he will make a statement on the matter.

– Pat Breen.
* For WRITTEN answer on Tuesday, 3rd November, 2009.
Ref No: 39185/09

REPLY

Minister for Finance ( Mr 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 confirmed 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 applies to departures from any Irish airport where the destination is 300kms or less from Dublin airport. This means that all Irish departures to locations such as Manchester, Liverpool and Glasgow are 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 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 are only 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 have only a very limited effect on tourist numbers. The Government appreciates the airline industry continues to go through a difficult period. However, this difficult trading period arises primarily from weak world economic activity.

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. The Government has 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’s a sector that already has considerable preferential treatment. In the circumstances it is not proposed to exempt airlines using Shannon airport from the air travel tax.