Travel tax to be cut or dropped as airlines apply pressure
Published 06/12/2010 | 05:00
The controversial €10 travel tax will either be axed or reduced in tomorrow's budget.
The tax breaches European rules and the Government has also come under pressure from airlines and the tourism industry to remove it.
Negotiations have been ongoing between the Government and airlines ahead of the budget.
Tourism Minister Mary Hanafin has met Aer Lingus boss Christoph Mueller and Ryanair's deputy chief Michael Cawley in recent weeks to discuss the tax which they believe has contributed to the recent fall in tourists flying here.
The tax also breaches European Commission rules because two rates apply here -- €10 for flights from Ireland further than 300km and €2 for shorter trips to parts of Britan and internal flights.
Under EU rules a flat rate has to apply but the tax can also be ditched.
Government sources confirmed yesterday that Finance Minister Brian Lenihan will announce either a scrapping of the tax or a reduction.
Recent tourism figures show 858,600 fewer visitors came to Ireland in the first nine months of the year.
The annual decline from Britain, Ireland's largest market, was 456,100, and there was also a drop in our second largest market, the European continent, of 336,600 or 17pc. The tax has also been a disappointment for the Government.
While it was originally expected to yield €125m a year, the forecast for 2010 is closer to €100m.
Ryanair welcomed the move yesterday but added that airport charges should also be cut in a further bid to entice tourists.
"This is about Ireland being competitive and we have promised to increase passenger numbers to Ireland by six million in return for a scrapping of the tax," said Stephen McNamara, Ryanair communications manager.
Ryanair is also calling for the sale of Cork and Shannon Airports and the sell-off of terminals one and two at Dublin Airport.