EU investigates two-tier travel tax

THE travel tax, which is blamed for contributing to the drop in tourist numbers, is being investigated by the European Commission.

The problem is not that the Government has imposed the tax on people taking flights, but that two different rates apply, depending on the length of the trip.

The tax is €2 for journeys less than 300km from Dublin Airport, which covers all domestic flights, as well as those to some parts of Britain.

But for flights to any other part of the European Union or further afield, the tax is €10 per flight.

EU legislation does not prohibit the state imposing such a tax, Labour MEP Proinsias De Rossa points out, but the differing rates may breach EU rules by differentiating between member states.

Transport Commissioner Siim Kallas said his staff is investigating the air travel tax on this basis.

Mr De Rossa said: “I welcome this investigation and I would urge the commission to conclude its deliberations as quickly as possible.

“If the commission finds against the Government, the air travel tax shouldbe abolished,” he added.

However, other sources suggest that the Government, which expected to raise €150 million a year from the tax, may simply apply the same sum to all flights, domestic and overseas by either increasing it on domestic flights, or reducing it on external travel.

The Labour Party argues the tax is counterproductive and has contributed to the drop of 18.5% in visitors to the country in March compared to the same month the previous year.

“The Dutch government introduced a similar tax in 2008 expecting to raise over €320m, but a study they carried out later estimated the tax cost the airlines close to €1 billion, Dutch airports €97m and the Dutch economy more than €1bn, so they abolished it,” said Mr De Rossa.

He added that the Government’s consultative group on tourism, the Tourism Renewal Group, has urged its removal while the chairman of Fáilte Ireland has said it is costing the economy more than €30m a year.

“The Government should now move to abolish the tax before it is eventually forced to by the EU, after possibly a lengthy and futile legal battle in the EU courts,” Mr De Rossa said.