Wednesday, 26 January 2011
Finance Bill 2011: Committee Stage
John Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
The rates of tax applied by the countries to which I refer are higher than the Irish rate, in some cases substantially so. The trend in Europe is towards applying a tax on air travel. Calls have been made to abolish the tax on the basis that it adversely affects the number of people travelling to Ireland. The Minister has difficulty accepting this proposition and considers that the impact of the air travel tax has been overstated. The numbers travelling appear to be more closely related to other factors, including the level of economic activity. Notwithstanding these reservations, the Minister decided that a single, revised rate of air travel tax of €3 will come into effect on 1 March. He indicated that the reduction announced in the budget should only apply on a temporary basis and that the rate would be increased unless there is clear and decisive evidence of an appropriate response from the airlines to increasing capacity and numbers travelling to Ireland by air. He was pleased his budget announcement was supplemented by an incentive scheme introduced by the Dublin Airport Authority for a full rebate of airport charges for additional traffic delivered above a certain threshold based on 2010 passenger numbers.
A modest air tax of €3 will yield close to €35 million in a full year. The case for reducing the tax further does not stand up, particularly as we are undergoing fiscal pressures and there is a requirement that the tax system be viewed as fair. The reduction in the air travel tax was a significant concession. The correct approach is to wait to see whether passenger numbers increase on foot of the change. In that regard, the cost of enhancing the concession further would be more than €10 million. In that context, the amendment is not accepted.