German tax under fire

World Travel and Tourism Council has warned Germany that a new air passenger tax could injure the country’s outbound tourism industry negating any benefits the tax might deliver, the organisation stated Sunday. The new air passenger tax will be apply for all airline departures from Germany, 1 January 2011. Air Berlin and Ryanair have both indicated they will cut capacity and services from the country next summer. The tax aims to raise EU1 billion annually. The taxes are EU8, EU25 and EU45 for short-haul, mid-range and long-haul trips.

WTTC has long made the case against passenger taxes, particularly the UK’s Air Passenger Duty. It believes that any tax is a barrier to the full growth potential of the industry. “Governments continue to milk the tourism ‘cash cow’ with little thought for an industry that can create jobs, generate exports and stimulate investment to power sustainable economic growth,” said WTTC president, David Scowsill.

Apart from WTTC, the International Air Transport Association director general, Giovanni Bisignani, referred to the tax as “the worst kind of short-sighted policy irresponsibility” and “a cash-grab”  and inappropriate at a time of economic hardship. IATA estimates it could add a EUR2 billion per annum burden on aviation in a region that has just lost that amount to disruption caused by volcanic ash cloud.

There were warnings that traffic in Germany could drop by up to 3% as a result of the tax, as passengers seek cheaper fares from neighbouring countries. However, European transport NGO Transport & Environment, Bill Hemmings said: “Germany is playing catch-up. The UK and France both introduced ticket taxes to make up for the lack of VAT on international tickets. Other governments across Europe should be doing the same; it’s far smarter to close this loophole than to raise taxes on labour, for example.”

Germany is not the first country to introduce air passenger taxes. United Kingdom, France, Malta, Denmark and Belgium all have similar taxes, but only the first two nations were successful in sustaining collection. The others discontinued the tax due to a lack of net profit after collection and adverse public opinion.

The UK introduced an APD (Air Passenger Duty Tax) back in 1994. The tax was gradually raised and most recently scaled to the distance travelled by zones. At this moment the tax is UKP11 and UKP 55 pounds for short and long-haul flights respectively. From November 2010 the tax was raised to UKP 12 and UKP85. Business and first class passengers pay double.

France introduced its air passenger tax in July 2006 and there has been little or no opposition to what is called Taxe de Solidarité sur les billets d’avion that is worth mentioning. The German government introduced a major overhaul of national finances in May 2010. A part of this Sparpaket is identified as an airline ticket tax. It is also being sold as an eco-surcharge. After some initial skirmishes the tax was fixed at Euro 8 for European flights, Euro 25 for mid-range flights and Euro 45 for long-haul flights.

Source=ttrweekly