Irish Finance Minister raises prospect of reintroducing air travel tax, as industry is under-taxed

Minister for Finance Michael Noonan has said the air travel industry may be considered to be under-taxed and the ability to apply the tax should remain in order to raise revenue.  He has said the some form of air travel tax should be reintroduced, as air travel pays no VAT and no fuel duty.  There is currently in Ireland a report by the National Civil Aviation Development Forum, that is recommending that Air Passenger Duty (APD) is formally abolished. APD was reduced in Ireland from €3 per passenger to zero in 2014. It had been €2 for short haul trips and €10 for long haul trips until 2010, and then a flat rate €3 for all trips from 2010 to 2014. Mr Noonan strongly rejected the proposal to remove APD, insisting the levy – at just €3 has no impact on the aviation industry, or passenger demand. He said the tax was a “useful tool for raising revenue and paying for externalities associated with air tax such as emissions, noise pollution, etc”.  APD was only cut due to very heavy lobbying by the aviation industry. There is now aviation development forum in Ireland, set up since the Brexit vote. It comprises senior representatives in Irish aviation, is chaired by the Department of Transport, and aims to help the aviation industry to grow.



Irish Finance Minister Noonan raises prospect of reintroducing air travel tax

Recommendation from aviation forum to formally abolish levy rejected by Minister

By Sarah Bardon (The Irish Times)


Minister for Finance Michael Noonan has raised the prospect of reintroducing the air travel tax, claiming the aviation industry is under-taxed.

Mr Noonan was responding to a report from the National Civil Aviation Development Forum brought to Cabinet by Minister for Transport Shane Ross this week.

The report recommends the levy, which was reduced from €3 per passenger to zero in 2014, be formally abolished.

Mr Noonan strongly rejected the proposal, insisting the levy has no impact on the aviation industry. He said the tax was a “useful tool for raising revenue and paying for externalities associated with air tax such as emissions, noise pollution, etc”.

Mr Noonan also noted commercial airlines enjoy exemption from excise duty and a VAT exemption on tickets.

He said the industry may be considered to be under-taxed and the ability to apply the air travel tax should remain in order to raise revenue.

Heavy lobbying

Aviation tax was introduced in 2009 but, after heavy lobbying from airlines, it was reduced to zero in 2014 by Mr Noonan.  While the levy was liable to the airline and not the customer, it was usually reflected in the price of a flight.

The aviation development forum was established in 2016 following Britain’s vote to leave the European Union.  It comprises senior representatives in Irish aviation and is chaired by the Department of Transport.

The forum is tasked with examining how the industry can grow and how to introduce enhanced competitiveness to the market.

The body makes a number of other recommendations including refunding trainee pilots who pay for their own training. Currently airlines can submit training costs as a deductible expense for tax purposes.



See earlier – in 2013:

Irish Republic to scrap air travel tax – which was only €3 (had been €2 and €10 till 2010)

The Irish government has announced that it will be scrapping its tax on air travel. At present there is a tax of just €3 per flight, and this will end in April 2014.  This has led to concerns about the potential impact on Northern Ireland’s airports, where there is still Air Passenger duty of £13 per passenger (€26 per return flight) for short haul flights (not for long haul flights).  Ryanair has immediately said it will increase its traffic at Irish airports by one million passengers a year – which is rather surprising, if the difference in tax from what it is now is just €3.  It is not thought likely that many people will travel from Northern Ireland to Dublin to save €20 – the trip there and back might cost more.  George Best Belfast City Airport said the move was “very unlikely to cause a stampede to Dublin for cheap flights”.  Stormont Finance Minister, Simon Hamilton, said the move by the Republic was “not really a surprise” and that it would be prohibitively expensive for Northern Ireland to match the cut. “The cost to the NI block grant and other public services would be significant – between £60 – £90 million a year,” he said.


Earlier (back in 2010)

Ireland to go for flat rate flight tax of €3 from March to December 2011

Airlines: Lenihan warns airlines that travel tax cut is temporary 
8.12.2010  (Irish Independent)by  Ailish O’Hora.The Irish Government stopped short of axeing the controversial air travel tax
but instead changed it to a flat rate of €3.

Previously the charge was €2 for a short flight (less than 300km) and €10 for
a long-haul flight.

Finance Minister Brian Lenihan said the move, which takes effect from March,
would help the tourism industry which has taken a hit in the past year.

But he warned airlines such as Ryanair, which has been blaming the tax for lower
tourism figures, that the move is a temporary measure and would be reviewed next

“I do not want to see the reduction in tax being used by airlines as an opportunity
to raise their fees and charges,” Mr Lenihan said.

He added that other tourism incentives would be introduced by the Dublin Airport
Authority, including a full rebate on charges for any additional traffic above
current levels.

Recent figures show that 858,600 fewer tourists came to Ireland in the first
nine months of 2010. The annual decline from Britain, Ireland’s largest market,
was 456,100.

Ryanair, which had promised to increase the number of passengers here by six
million in return for the tax being abolished, condemned the reduction as a half
measure, adding that it had to be reduced under EU rules.

The two-rate system that applied here breached EU regulations. The charge of
€10 applied to flights from Ireland further than 300km and €2 for shorter trips
to parts of Britain and internal flights.

“Today’s Budget proves, yet again, that this Government has no tourism policy,”
said Ryanair boss Michael O’Leary.

“The reduction in the €10 tax to €3 was forced on them by the EU Commission’s
infringement proceedings and will bring in less than €35m per annum.”

The tax reduction and incentives were welcomed by Tourism Minister Mary Hanafin.
She said that while implementing the measure would mean the Government taking
in €56m less in tax, the knock-on benefits would be felt throughout the wider
industry which would help support the 250,000 people employed in tourism, culture
and sports.

The Budget provides €400m in funds for the three sectors, including almost €148m
for tourism and €150m for culture.

Tourism industry representatives said the changes were positive, especially the
reduction in the travel tax.

“The capital commitment of €25m to tourism product development is also welcome
and will allow for important new products and enhancement of existing products,”
Irish Tourist Industry Confederation chief executive Eamonn McKeon said.

Irish Independent