TRAVEL TAX:THE AIR travel tax on passengers leaving Irish airports is to be reduced from €10 to €3 following the Budget.
Noting calls for the abolition of the tax on the basis it was causing a reduction in visitor numbers, Minister for Finance Brian Lenihan said it was decided the reduced tax would come into effect on March 1st.
“But let me be clear: this reduced rate is being applied on a temporary basis until the end of 2011,” he said. The position would be reviewed next year, and “the rate will be increased unless there is evidence of an appropriate response from the airlines. I do not want to see the reduction in the tax being used by airlines as an opportunity to raise their fees and charges,” he added.
Dublin Airport Authority (DAA) is also set to introduce an incentive scheme aimed at increasing traffic. The scheme would provide a full rebate of airport charges for traffic at Dublin, Cork and Shannon airports above an annual threshold of €23.5 million.
Minister for Tourism Mary Hanafin said she hoped airlines would respond positively to the tax cut.
However, Ryanair condemned what it said was a tourist half-measure. The carrier said although the reduction was welcome, “it was clearly forced on the Irish Government by the EU Commission’s infringement proceedings against the illegal €10 tax”.
Ryanair chief Michael O’Leary claimed the cut would not do anything to reverse the decline in Irish air traffic and tourism, adding the new €3 rate will bring in under €35 million a year.
Chief executive of the Irish Tourist Industry Confederation Eamonn McKeon said the cut in the tax was a “significant development”. Together with the DAA incentive it is a major incentive for airlines to develop new routes, he added, while welcoming the capital commitment of €25 million to tourism development.
The Irish Hotels Federation welcomed what it said was “strong and decisive action” in the Budget to assist the tourism sector. Chief executive Tim Fenn said the lessening of the travel tax “should have a positive impact to assist in increasing visitor numbers from . . . Britain and Germany”.
Labour tourism spokeswoman Mary Upton said the onus was now on airlines to deliver increased tourist numbers.
The tax on departures was introduced on March 30th, 2009. It recently emerged the tax breaches European Commission rules. The commission has taken infringement proceedings against Ireland.
