Economy ‘will lose €30m a year from travel tax’

THE head of the state tourism board has warned that the Government’s controversial air travel tax will result in net losses of more than €30m to the Irish economy each year.

Redmond O’Donoghue, the chairman of Fáilte Ireland, has called for the €10 tax, which was introduced last March, to be reviewed “as a matter of urgency”.

His comments are contained in the submission by Fáilte Ireland to the Commission on Taxation which published its report last September.

Although Mr O’Donoghue has not made any public comment on the controversial tax, it shows that Fáilte Ireland is seriously concerned about the negative impact the new tax is having on the number of tourists visiting Ireland in 2009.

Official figures show almost 600,000 fewer overseas visitors have come to Ireland so far this year compared with the corresponding period 2008.

The Government has come under sustained pressure to revoke the tax following repeated calls by a range of tourism business interests for the tax to be abolished in the budget on December 9. The Department of Finance has estimated that the tax will raise €85m during 2009 and €125m in a full year.

Mr O’Donoghue’s comments as head of the national tourism development body will pile further pressure on the Government to abolish the tax as he is now the most senior tourism official to oppose the tax.

Although Mr O’Donoghue said Fáilte Ireland appreciated the need for the Government to raise further revenue, he claimed Fáilte Ireland’s research indicated the measure would be counter-productive and result in net losses of €30m per annum.

“It is clear from our analysis that any gain to the Exchequer will be off-set by a loss of earnings from price-sensitive visitors who will be deterred from visiting (and consequently spending) here,” said Mr O’Donoghue.

Fáilte Ireland claims the tax will threaten some of the 230,000 jobs in the tourism sector, which contributes €6 billion per annum to the economy.

“By giving rise to a net loss to the national economy, the air travel tax clearly has failed in its prime objective and should be reversed,” said Mr O’Donoghue.

He also pointed out that several other EU countries , including the Netherlands, Belgium, Denmark, Sweden and Malta, had either abandoned similar air travel taxes or suspended plans to introduce them.

Earlier this month, the Tourism Renewal Group – on which Fáilte Ireland was represented by its chief executive, Shaun Quinn – also recommended the removal of the €10 tax as one of several short-term measures necessary to ensure the survival of Irish tourism.

The group’s chairman, Maurice Pratt, said the air travel tax was having a negative impact on overseas visitors, although he conceded that the scale of the problem was difficult to quantify.

Although the Commission on Taxation recommended that the Government should review the tax, it said it should be done in the context of the pending inclusion of air travel in the EU Emissions Trading Scheme in 2012.

The Commission recognised that the air travel tax has merits “from an environmental perspective”.

Tourism Minister Martin Cullen has so far declined to state publicly if he supports the abolition of the tax.