Australian Passenger Movement Charge to rise from $55 to $60 for any flight from Australia

In Australia the Passenger Movement Charge (PMC) was established in 1995, replacing Departure Tax (which began in 1978). It has been at he level of $55 (Australian dollars) for anyone aged over 12 travelling outside Australia (unless they are in transit through Australia). The relevant Senate committee has been investigating the proposal to raise it $5 to $60, and will produce its report shortly.  $60 per person (about £36.50) is the cost for any length of trip, economy or premium class, for air travel or sea travel.  It is administered by the Department of Immigration and Border Protection. The Australian PMC is considered to be the highest departure tax in the world, after the UK. The airlines, and IATA, naturally do not like the tax – let alone the tiny increase, and have complained how it cuts travel and could allegedly – they claim – damage the economy. As the charge is a flat rate, it is a higher proportion of short haul flights to Tasmania, than on long haul. IATA says the tiny rise might cut the number of international return flights to Australia by some 30,000 per year.  “It will act as a brake on the Australian aviation sector,” IATA said, and they give estimates of up to $375 million for the national economy, and 3,800 more jobs if there was no PMC. IATA told the Senate committee that the PMC was “tax on tourism.”
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The Australian Passenger Movement Charge  (Wikipedia)

The passenger movement charge (PMC) is a tax payable by all passengers departing Australia on international flights or sea transport, whether or not the passenger intends to return to Australia. The PMC was introduced in July 1995 (replacing the previous departure tax which commenced in October 1978) and was initially described as a charge to partially offset the cost to government of the provision of passenger facilitation at airports, principally customs, immigration and quarantine functions.

Since 1 July 2012, the PMC has been A$55. The PMC is a flat rate, and not a percentage of the airfare. The rate is the same for low-price (or free or points tickets) fares as for first-class fares, and for short distance flights as for long-haul flights. The PMC is paid the airlines and recovered from passengers as part of the fare or as a special charge (e.g., in the case of free or point tickets). According to a 2013 survey by the International Air Transport Association, the average cost of the PMC on the airfare is 3.5%. The PMC is in addition to airport fees and airline surcharges. As at 2001, when the PMC was $30, the revenue from the PMC was approximately A$226 million per annum.

The PMC is levied under the Passenger Movement Charge Act 1978 and collected under the Passenger Movement Charge Collection Act 1978. It is administered by the Australian Customs and Border Protection Service. The PMC is levied on all passengers leaving Australia by air or sea travel,[4] unless if the passenger is exempt. The main exemptions apply to passengers 12 years of age or younger, transit or emergency passengers, crew members, defence personnel and their spouses, among others. The PMC is typically included in the price of air fares and remitted by airlines on behalf of individual travellers.

1978-1995

Introduced in 1978, the A$10 departure tax’s initial stated aim was to recover costs associated with passenger processing at Australia’s air and sea ports. In subsequent budgets the departure tax was linked to the promotion of tourism either through marketing or through the removal of a cost barrier to travel as in 1988.

The departure tax was increased to A$20 in 1981, but then reduced to A$10 in 1988 to stimulate the tourism industry. In 1991 the rate was increased to A$20 to fund a A$20 million tourism promotion package in an attempt to counter the negative impact of the pilots’ dispute of 1989. The departure tax was raised again in 1994 to A$25 to offset the additional cost of tourism promotion expenditure, specifically an additional A$80 million allocated to the development of new tourism products.

1995-2012

Since its name change to passenger movement charge in 1995, the rate of the PMC has changed on several occasions. In most cases the Australian federal government has given a rationale for rate increases.

 

Year Rate Rationale
1995 A$27 To offset the cost of customs, immigration and quarantine processing at Australia’s borders and the cost of issuing short-term visitor. visas.
1998 A$30 To meet the additional costs associated with the transit of people and goods for the Sydney 2000 Olympic Games.
2001 A$38 To fund increased passenger processing costs as part of Australia’s response to the threat of the introduction of foot-and-mouth disease.
2008 A$47 To partially fund national aviation security initiatives.
2012 A$55 No reason provided.

 

from Wikipedia  https://en.wikipedia.org/wiki/Passenger_Movement_Charge

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Departure tax hike a ‘brake on aviation sector’: trade body

Australia already has the world’s second-highest departure tax.

9.11.2016 (The Australian)

By MITCHELL BINGEMANN

The global aviation industry’s trade body has slammed the ­government’s decision to increase passenger departure taxes to $60, saying the proposal will reduce the number of international ­return trips to Australia by 30,000 a year.

The criticisms from the International Air Transport Association (IATA)— which represents 260 airlines accounting for 83% of global air traffic — come as the Senate committee investigating the proposal to increase the so-called passenger movement charge by $5 to $60 hands down its report into the changes today.

In a submission to the committee, IATA has presented economic modelling that suggests increases to the passenger movement charge would lead to increased fares and significant harm for Australian exporters through higher travel costs and reduced competitiveness.

IATA said the reduction in demand as a result of the increase in the charge would equate to 30,000 fewer international passenger return journeys each year and 350,000 fewer trips, compared with a scenario in which the tax was abolished.

“It will act as a brake on the Australian aviation sector,” IATA said. “We estimate that the reduction in aviation-related gross value-added (GVA), compared with a scenario where the passenger movement charge was abolished, could total $375 million with 3800 fewer jobs supported.”

Australia has the world’s second-highest departure tax, beaten only by Britain’s air passenger duty, which slugs Australians flying home from Britain with a £73 ($118) charge for economy class and £146 for all other classes.

IATA says the impact of Australia’s tax would be far greater on short- and mid-haul routes, including those across the Tasman. “If it were to increase to $60, the passenger movement charge would represent more than 9% of the average return fare on trans-Tasman routes and 5% on routes between Australia and the rest of Asia,” it said.

“We estimate that a 4.4% increase in average travel cost would drive a reduction in passenger traffic of around 4.2% annually compared to the abolition of the (charge).”

The increase in the passenger movement charge was announced by Scott Morrison in September as a counterbalance to reduce the tax rates paid by overseas backpackers.

The proposal has been slammed by tourism and travel industry groups, which claim the tax increase will dampen demand for inbound passengers.

In its submission to the Senate committee, Qantas branded the change as a “tax on tourism” and called for it to be rejected, saying it was inconsistent with the government’s objective of strengthening the economy through growth in tourism.

Labor, with support from the Greens, has opposed the changes and attempted to water down the backpacker tax proposal, which has sent the Senate towards a showdown over the policy.

http://www.theaustralian.com.au/business/aviation/departure-tax-hike-a-brake-onaviation-sector-trade-body/news-story/ca18592109cca86ebceb5eb2f3a18cd3

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What is Passenger Movement Charge (PMC)?

The Passenger Movement Charge (PMC) is a $55 cost for the departure of a person from Australia for another country, whether or not the person returns to Australia. The PMC was introduced in July 1995 replacing Departure Tax, and is administered by the Department of Immigration and Border Protection (the Department) under thePassenger Movement Charge Act 1978 and collected under the Passenger Movement Charge Collection Act 1978.

How is PMC Collected?

PMC is collected at the time a ticket is sold to a passenger and then forwarded by the carrier (airline carriers, shipping companies and air charter operators) to the Department.

Does everyone have to pay the PMC?

The following passengers are exempt from payment of the PMC and should be identified at the time of ticket sale:

  • a person less than 12 years of age on the day of departure
  • a transit passenger passing through Australia to another destination overseas
  • an emergency passenger
  • a previous departure by a person from Australia by ship who is in the course of a journey (eg round trip cruise)
  • a crew member of an aircraft or a ship.

Full details of exemption can be found in Section 5 Passenger Movement Charge Collection Act 1978.

https://www.border.gov.au/Trav/Ente/Goin/Departing/Passenger-Movement-Charge-(PMC)

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Extra charge for airline passengers a ‘cash grab’

SEPTEMBER 28, 2016 (New.com.au)

The Passenger Movement Charge, a levy built-in to the price of fares every time a passenger leaves Australia, is set to increase from $55 to $60.

By Lauren McMah

THE nation’s peak tourism and aviation lobby group has accused the Federal Government of a blatant “cash grab” after it announced it would slog passengers an extra $5 every time they fly overseas.

Treasurer Scott Morrison said Australia’s Passenger Movement Charge — which is built-in to all airline tickets — would be raised from $55 to $60 from July 1.

The higher fee would make up for lost revenue after the government backed down on plans to impose a 32.5 per cent tax on backpacker workers, opting instead to tax visitors on working holiday visas at 19 per cent from their first dollar earned.

Tourism and Transport Forum chief executive Margy Osmond said the reduction of the backpacker tax was a “step in the right direction” but the decision to raise Australia’s already-high departure tax was unacceptable.

“It is outrageous situation that the Federal Government continues to view the tourism industry as a cash cow,” Ms Osmond said.

“Industry has been completely blindsided by this decision to increase the Passenger Movement Charge by $5 — a nine per cent hike in the rate. At no point was it flagged in any discussions in which we took part and is a bitter disappointment that we’ve been slapped with this tax hike on every traveller — Australian or international visitor — heading overseas.
“I want to make it quite clear that TTF, representing the industry, has been steadfast in our opposition to any increase in the Passenger Movement Charge. Before the Federal Election, the first plank of our election manifesto was the demand that all sides of politics continue to freeze the Passenger Movement Charge at the current rate of $55.”

Australia has already been called out for the high price of its Passenger Movement Charge, which is the world’s second highest departure tax. In 2013, the levy was slammed at a global tourism forum as the world’s most expensive international travel tax for short-haul flights.

The levy was originally introduced in 1995 to partially cover the cost of processing passengers at airports. It has been set at $55 since 2012.

The Federal Government originally planned to remove the $18,000 tax-free income concession for backpackers and impose a 32.5 per cent tax from the first dollar.
But in an announcement today, Mr Morrison said from January 1 the tax would be 19 per cent up to $37,000, after which normal tax rates will apply.

Ms Osmond said while she was disappointed the government was pressing ahead with the backpacker tax, “19 per cent is a hell of a lot better than 32.5 per cent”.

“We do acknowledge that the Government has picked up some of TTF’s suggestions,” she said. “The revised backpacker tax package does contain some positives for the industry. The extension of the age limit for working holiday makers from 30 to 35 and the reduction of the cost of working holiday visa by $50 to $390 is welcome. The relaxation of some of the employment restrictions that will now allow backpackers to continue to work for the same employer for 12 months but in different states or territories in Australia is also positive.

“The allocation of $10 million for the industry to work with Tourism Australia to increase the working holiday makers to Australia following the more than 43,000 decline we’ve experienced over the past three years is something that TTF has been calling for as part of this review.”

http://www.news.com.au/travel/travel-updates/extra-charge-for-airline-passengers-a-cash-grab/news-story/c83a64944e5d19a97952add1fe6f4902

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Rates of tax in some other countries:

OECD
Country Tax    Rate (long haul)
Australia Passenger Movement Charge   A$55 (US$43)
Germany Luftverkehrsteuergesetz   All other countries €42.18 (US$46.35)
Austria Flugabgabegesetz   All other countries €35 (US$38.50)
Mexico Derecho de No Inmigrante   Mex$294 (US$19.30)

from

https://en.wikipedia.org/wiki/Passenger_Movement_Charge


UK

New rates of APD after 1st April 2015 compared with during 2014:  (No changes to APD in the March 2016 Budget)

Lower (standard) rate Higher rate
2014  From 1.4.2015   From  1.4.2016 2014 From 1.4.2015  From 1.4.2016
Band A.  0 – 2000 miles £13 £13 £13 £26 £26 £26
Band B.  2000 – 4000 miles £69 £71 £73 £138 £142 £146
Band C.  4000 – 6000 miles £85 £71 £73 £170 £142 £146
Band D.  Over 6000 miles £97 £71 £73 £194 £142 £146

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