Hanafin sought hold on travel tax

THE Minister for Tourism, Mary Hanafin wrote to the Minister for Finance, Brian Lenihan in the run-up to the budget urging him to suspend the contentious €10 air travel tax for two years.

In a letter released through the Freedom of Information Act, Minister Hanafin told Minister Lenihan that “in the event that the carriers respond positively to this reduction in costs, its suspension could be extended indefinitely on the basis of the additional tax revenues generated by the additional tourism traffic generated by the carriers”.

In her letter, dated October 13 last, Minister Hanafin told Minister Lenihan that the air travel tax should be suspended for a period up to two years “given the extraordinary adverse conditions which have affected the Irish tourist industry in recent years, most recently the impact of the volcanic ash disruption on the viability of our air access links”.

However, the Cabinet rejected Minister Hanafin’s proposal and instead in the budget, Minister Lenihan announced that the air travel tax be lowered to €3 and the new charge is to be introduced from March 1.

The revenues generated from the tax totalled €104.6 million last year and this followed €84.4million generated in 2009.

In the letter, Ms Hanafin stated: “While many factors have played a part in the significant reversal in both overseas tourist numbers and overseas tourist expenditure, including consumer confidence in key markets and adverse exchange rates, there is empirical evidence and economic evidence that the air travel tax has exacerbated the situation.”

Ryanair spokesman Stephen McNamara said yesterday: “Ryanair advised the Fianna Fáil-led government two years ago that its €10 tourist tax and rubber-stamping price rises at the DAA monopoly airports would cause the collapse of Irish tourism. Traffic at Dublin Airport has slumped, from 23.5m in 2008 to just 18.5m in 2010.

He added: “Hopefully the next Government will see sense and cut airport charges, axe the tourist tax and introduce competing terminals at Dublin airport, while breaking-up the DAA monopoly, so that Irish tourism can compete and grow once more. Ryanair has offered to deliver 4m additional passengers over five years if these sensible policies are put in place by the new Irish government.”