Minister defends travel tax

FINANCE Minister Brian Lenihan has defended the controversial €10 air travel, which Ryanair claim is behind its decision to slash services from Shannon.
He said it wasn’t a huge factor in people’s travel plans and that there needs to be some realism about the public finances. The Minister was speaking during a debate in the Dáíl on the tax, following a Fine Gael motion.
“Deputies are aware of the general economic position and the responsibility of the Government to bridge the gap between expenditure and income. The air travel tax is but one of the measures adopted for this purpose and so far it has raised €99 million and will raise €125 million in a full year. Any party coming into the House arguing for the abolition of a tax has a responsibility to specify an alternative way of raising that revenue. Is Fine Gael suggesting we raise it by increasing income tax, VAT or excise duty?
“It has been recognised by all commentators that our revenue base has been very weak in recent years. There is an onus on anyone advocating its further depletion to identify where that revenue base can be shored up.”
He rejected claims that the tax was having a major impact on tourism and said it wouldn’t be scrapped.
“To suggest that people are not travelling because of a tax of €10 is tendentious. An air trip abroad generally involves expenditure of several hundred euro. Singling out the €10 tax charge as the major disincentive for the intending traveller is stretching credibility. How can it be argued that the tax is more of a disincentive, for example, than the non-discretionary online check-in fee of €5 per flight or €10 per return flight? That is to single out just one of the myriad charges imposed by the airlines.
“The introduction of a modest air travel tax is an important revenue raising measure in the context of the financial challenges we now face. The Government regards this tax as a fair tax in the current circumstances and I have no immediate plans to abolish it. It will raise approximately €125 million in a full year in circumstances where those additional revenues are required to fund badly needed services.”
During the debate Clare TD Joe Carey said that there were many in favour of scrapping the €10 tax.
“Groups advising the Government, such as the Commission on Taxation and the tourism renewal group, have condemned the tax and Fáilte Ireland, IBEC and the National Competitiveness Council want it abolished. Ryanair boss Michael O’Leary, Aer Lingus CEO Christoph Mueller and CityJet CEO Geoffrey White are all in agreement that this tax must go. Countries like the Netherlands, Spain, Denmark and Greece have either reduced airport taxes or abolished travel taxes. Why can we not do the same in this country?” he said.
Deputy Carey called for a united front from Mid-West TDs and called on newly appointed Minister, Tony Killeen, to use his new powers to advance the interests of the county.
“This tax has, in effect, driven the vast majority of Ryanair business from Shannon Airport. That in turn has led to a loss in business, connectivity to Shannon and jobs, which has resulted in a spiral of economic decline. This decline could be halted if those elected in the Mid-West region from Clare, Limerick and north Tipperary stand for their region tonight and vote for this Fine Gael motion to abolish this disastrous tax.”
Ultimately the Fine Gael motion failed and, speaking afterwards, Deputy Pat Breen said retaining the tax was shortsighted.
“The Finance Minister claims that around €125 million will be generated in a full year from this tax, yet millions more is being lost to the coffers of this country, in tourism related revenues as a result of declining passenger traffic.
“Rather than admit they got this one wrong and axe the Travel tax, they are prepared to let Shannon Airport lose a significant amount of its Ryanair business this week.”