Government removes travel tax for Sligo and Donegal

The Department of Finance yesterday announced that Sligo and Donegal airports would be exempt from the travel tax which is to be implemented as part of the 2009 Budget. The Minister for Finance Brian Lenihan said that he had requested the Revenue commissioners to bring forward an amendment to the proposed legislation which exempts travel from airports where passenger numbers are less than 50,000 per annum.

Ryanair welcomed the removal of the tax "for small peripheral airports" but urged the government to scrap the tax as tourism and traffic numbers will be affected at airports where it is to be implemented.

Ryanair's Stephen McNamara said  “The tragedy here is that the Government is only scrapping the tourist tax from peripheral airports such as Donegal and Sligo while ignoring airports such as Dublin, which lost more passengers in January than Donegal and Sligo carry in a year, and Shannon”. 

Ryanair condemn €47m promotion budget

Ryanair today condemned the plan announced by Tourism Minister Martin Cullen to allocate €47m in funds to promote Ireland as a tourist destination in 2009. 

There is certainly a perverse logic in allocating funds to promote tourism on one hand and take €10 in travel tax from those same tourists once they land in Ireland. The €47m would probably be better spent as an offset against the €150m that Finance Minister Brian Lenihan hopes to gather in tax revenue from the travel tax. 

Air tax - more tinkering than U turn

The Irish Government today published the Finance Bill which signs into law the announcements made in the recent Budget 2009. Since Budget Day there have been many criticisms of the effects that the proposed air travel tax would have on traffic to and from the country. Management of the airports West of the Shannon pointed out the inequitable nature of the tax, in particular the fact that those airports would bear a disproportionately higher level of taxation at €10 per passenger trip than passengers departing Dublin.

Whilst many expected a major revamp of the tax, the detail in today's Finance Bill won't satisfy many. 

The €2 tax will apply to travel from airports where the destination is 300km or less from Dublin Airport. €10 will apply to all other trips. An aircraft is defined as having twenty or more seats so executive aircraft will still be exempt, as will military  and Government flights.

An added burden on the airlines is that they must report passenger numbers monthly to the Revenue Commissioners and retain records for inspection. In addition the airlines are also responsible for collection and payment of the tax to Revenue. Under the finance Bill the Revenue Commissioners have the power to force an airline to post security for payments due, with ground handling agents shouldering the responsibility in the event of an airline defaulting on payment.

It is clear that the total cost per passenger will go far beyond the €2 or €10 per trip that will accrue to the Government coffers and that today's detail will do little to soften the impact of the tax as originally outlined.

Government to tinker with Air Travel Tax ?

Fine Gael's Deputy Spokesman on Foreign Affairs and T.D. for Clare, Pat Breen has been told today by the Minister  for Finance, Brian Lenihan T.D. that the Minister looks likely to examine concerns raised in relation to the effect of the €10 Air Travel Tax on the aviation sector in the context of the Finance Bill.

Deputy Breen said " I hope the message is finally getting through loud and clear. The introduction of this tax in it's current form places air travel at a competitive disadvantage. It is bad for Shannon Airport and it is bad for the tourist sector in this region. I await the Finance Bill with interest to see how the Minister intends to address these concerns."

Replying to Deputy Breen's question in the Dail, Minister Lenihan said that "This measure is estimated to yield €95m in 2009 and €150m in a full year. This is not an insignificant amount of money and given the current fiscal environment, I not wish to see this level of anticipated revenue reduced. However, I am aware of a number of issues that were raised subsequent to my Budget announcement and these will be borne in mind in context of the Finance Bill.  

Lenihan announces tax on flights

In his first budget as Finance Minister, Brian Lenihan today announced a  new tax on air travel. From March 30 2009 a tax of €10 per person, per flight will be introduced.  'Shorter' flights, under 300 kms will be taxed at €2 per person per flight. 

The tax is payable by the relevant airport authority to Revenue which essentially means the airports have the responsibility of collecting the tax from the airlines.

The tax does not apply to passengers under two years of age or to aircraft with 20 or less passengers. There are certain other minor exclusions such as crew, flights to offshore islands or airports with less than 10,000 passengers per annum. The measure is designed to gather an additional €95m in revenue in 2009 and €150m in a full year.

A total of 15 routes from Dublin, including UK destinations in Liverpool, Glasgow, Blackpool, Manchester and Cardiff will be taxed at the lower level of €2 per person. 

By way of contrast, just three non Dublin routes from all the other airports in the state will be taxed at the lower rate - Cork to Newquay, Waterford to Galway and Donegal to Glasgow.

Prior to Lenihan's budget speech it had been widely speculated that a travel tax was to be introduced. Speaking on the lunchtime news on RTE Radio 1 today, Ryanair CEO Michael O'Leary questioned why the tax was being applied to air travel only and not being levied on ferry travel.

On numerous occasions in the recent past, Ryanair has stated that Shannon is one of only two loss making hubs in it's operation. This latest tax which will apply to all Ryanair flights at the airport will now implement a tax that equals or exceeds the average fare on the LCC.