Brian Lenihan Jnr (Dublin West, Fianna Fail)

I am informed by the Revenue Commissioners that the air travel tax arising from travel undertaken in any month is payable by airline operators by the 23rd of the following month. The yield from the air travel tax received in the period from May to November 2009, in respect of travel undertaken during the months April to October 2009 is €76.9 million. It is estimated that the air travel tax will yield approximately €125 million in a full year.

The Finance (No.2) Act 2008 confirmed the introduction of an air travel tax from 30 March 2009. However, I took account of concerns raised by the regional airports, particularly those on the western seaboard. The lower rate of €2 applies to departures from any Irish airport where the destination is 300 km or less from Dublin airport. This means that all Irish departures to locations such as Manchester, Liverpool and Glasgow are subject to the €2 rate.

Ireland is not unique in regard in applying a tax on air travel. Other countries within the EU, such as the United Kingdom and France, apply similar taxes, as do Australia and New Zealand. The rates for the Irish air travel tax are not unreasonable, both for shorter and longer journeys, when compared with rates in other countries. It should be recognised that tourists are only subject to the tax on their return journey. The additional €10 or €2 in the context of a much larger purchasing decision involving travel, hotel expenditures and so on should have only a limited effect on tourism numbers. The Government appreciates the airline industry continues to go through a difficult period. However, this difficult trading period arises primarily from weak world economic activity.

It should be noted that at present, the decline in air travel is an international phenomenon and as a result aviation services are contracting on a global basis. In the case of Ireland, the decline in passenger numbers through our airports is broadly in line with our international counterparts. This downward trend is evident for periods prior to the introduction of the air travel tax. Furthermore, passenger numbers for other modes of transport also have experienced broadly similar declines. While this is not a desirable position, it is clear that the air travel tax is not the substantive cause for the decline in passenger numbers.

We currently face significant financial challenges and the air travel tax is an important revenue-raising measure. The Government has tried to be as fair as possible in considering areas for additional tax revenues. It is worth noting that as fuel used by commercial airlines is completely exempt from tax, this is a sector that already has considerable preferential treatment.

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