Tuesday, December 28, 2010

IATA: Thailand's 'Green Tax' could hurt travel

The international airline industry is up in arms against Thailand's plan to impose a hefty tax on air travellers, warning it would be counterproductive for a country that relies heavily on tourism.
The International Air Transport Association (IATA) said a proposed 15% tax on ticket prices would discourage airlines to operate to Thailand and drive away travellers.
"We think it is absolutely counterproductive," said Jeff Poole, who oversees industry charges, fuel and taxation issues at IATA, told the Bangkok Post.
IATA, which represents 230 airlines, will soon formally raise its objection to the Thai government when it completes a paper on impacts to the overall economy from the "green tax."
The Thai cabinet last October agreed in principle to impose the air travel tax as part of a new environmental tax on polluting industries, products and services, starting in 2012.
"[Fifteen percent] is incredible high by any standard. We normally see a few percent in other countries, to which we strongly object, " said Mr Poole.
"Airlines always have a choice as to where they fly, and if it is more expensive to operate in one country or one airport compared to others, airlines will move their services to other locations where they can make a better financial recovery," he said.
From the travellers' perspective, if it costs a lot more to fly to Bangkok than to Kuala Lumpur or somewhere else in Asia, they will make a choice, he added.
IATA believes many other counties impose green taxes mainly for revenue purposes, even if they are doing so in the name of the environment.
Mr Poole cited the adverse effect of a similar tax imposed and later revoked by the Dutch government. "When they introduced the tax people just drove over the border to Germany and flew from other airports."
According to IATA, the Netherlands in 2009 collected 312 million in departure taxes but the impact cost the Dutch economy 1.2 billion.
Some other European countries are using departure taxes mainly to raise badly needed money, it said.
In June, Germany agreed to impose a new departure tax to raise $3.1 billion a year. The new UK air passenger duty is expected to raise 2.5 billion and an Austrian departure tax 90 million. These taxes can be 3-5% of the price of a ticket, IATA said.
"Aviation can help drive economic growth, but not if we are beaten to death with new taxes," IATA director-general Giovanni Bisignani said a media briefing in Geneva on Dec 14.
Next year, IATA will launch a major communication initiative in Europe to educate governments on the social and economic benefits of the aviation industry, he said.
The air transport industry generates 31.9 million jobs globally and aviation's global economic impact was estimated at $3.55 billion in 2007, equivalent to 7.5% of world GDP, according to IATA.

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