Dáil debates

Thursday, 27 January 2011

Finance Bill 2011: Report and Final Stages

 

2:00 pm

Photo of Michael NoonanMichael Noonan (Limerick East, Fine Gael)

I move amendment No. 35:

In page 192, line 19, to delete "€3" and substitute "€2".

Fine Gael has been campaigning for some years to abolish the travel tax. The tourism industry is one of the sectors of the economy with great job creation potential and it should be stimulated. Most industries need massive investment before one makes a material change. In the tourism industry, we have five star hotels all over the country, many of which are half empty; we have a surplus of self-catering accommodation, much of which is not rented; our golf courses are the finest in Europe and the United States, many of which are underused; we have a fine airport terminal in Dublin Airport at half capacity; Shannon and Cork Airports are at one quarter capacity; and the motorway network links the main cities, yet there is little traffic on them. We have all the services for a much bigger tourism industry and the only thing we lack is tourists. The number of tourists declined last year by over 1.5 million. We do not need to invest in the infrastructure but we need to attract people to the country. That involves marketing and reducing the imposition on tourists flying into Ireland.

The majority of tourists, particularly short-term visitors to the country, arrive on Aer Lingus or Ryanair flights. We all use the facility of booking on the Internet. People, especially young people, search for bargains. One can book flights for 1 cent and €5. When all the adding up is done, several flights are available from €25-€40. People may say the imposition of a travel tax of €10 is a nugatory amount but when one looks at the pricing of flights it is a serious imposition. It might influence the decision of whether a young German couple fly to Dublin or Prague. From the point of view of the airline, there is the opportunity to adjust fares upwards when the travel tax is abolished. One may say that another €2 on tickets will not make a difference. If the travel tax was abolished completely and the airline companies raised average fares by €2, the €2 is not a turnover issue; it runs straight to the bottom line. The flights are profitable anyway so the extra €2 runs straight to the bottom line. Ryanair carried 27 million passengers last year and if it had received €2 per passenger, we are talking serious money. There is a major incentive for flights to be repackaged to attract people.

The Minister has moved a long way to meeting the arguments made by Fine Gael but a problem exists in respect of domestic flights. A lower levy applied to people flying to airports in the UK from Irish locations. The effect of the Minister's changes is to increase the charge between Ireland and the UK by 50% rather than reducing it. He is applying the same level to everything. I ask him to examine the travel tax in respect of the concessionary level between Ireland and the UK. It should be revisited. I table this as a debating amendment rather than in the expectation that the Minister will accept this on Report Stage late in the afternoon when debate has been truncated.

Our view is that the travel tax should be abolished completely for all categories of flights. This should only be done if there is a quid pro quo offered by Ryanair, Aer Lingus and other carriers. The quid pro quo is to give them what they are looking for if they commit, over a period of time, to bring a certain number of passengers into the country. If they do not achieve the target, we can put the travel tax back on in two years' time. Business is business and the way to structure it is to give the airlines an incentive to bring in more people while having the stick of restoring it in the other hand if they do not bring in extra passengers. An opportunity was missed by not having that level of negotiation with the carriers. There is still a margin for some renegotiation.

Comments

No comments

Log in or join to post a public comment.