European Commission Investigates Irish Travel Tax

News - Local

Friday, 28 May 2010 15:28

Written by Denise Lyons

The European Commission is concerned that the Government's 'air travel tax' may breach EU law and is currently investigating the issue, according to Labour MEP Proinsias De Rossa.

MEP De Rossa said he received news of the investigation as part of a response to a parliamentary question by EU Transport Commissioner, Simm Kallas.

"Since the tax is levied at two different rates depending upon the distance of a given flight's destination from Dublin Airport, the Commission is concerned that this may mean substantially different conditions apply between 'internal' Irish flights and those between Ireland and other EU Member States, possibly breaching EU law”, he stated.

"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 would have to be abolished. While the tax is not the only cause of the reduction in the number of travellers to Ireland - down 18.5% in March of this year compared to March 2009 according to CSO statistics issued this week - international studies suggest that it is counterproductive for the economy as a whole and an unnecessary burden on an already ailing Irish airline industry.”

"In July 2008 for example, the Dutch government introduced a similar tax, expecting to raise over $400 million. A subsequent Dutch study calculated that the tax cost airlines $1.2 billion, Dutch airports $121 million, and the Dutch economy $1.6 billion. The tax was abolished the tax in July 2009.

"Even the Government’s own consultative group on tourism, The Tourism Renewal Group, strongly urged the removal of the air travel tax, while the Chairman of Fáilte Ireland has said it is costing the Irish economy over €30 million on an annual basis.

"As an Island nation it is essential we do not create additional barriers to access to Ireland. This tax is a counterproductive tax on tourism, one of the main drivers of economic growth. 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”, concluded the MEP.