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Dublin: 16 °C Wednesday 12 August, 2020
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EU decision means government may seek extra taxes from airlines

The European Commission says the previous version of the travel tax was unfair to Irish airlines – who must now cough up extra.

Image: Sean MacEntee via Flickr

THE GOVERNMENT may be forced to seek extra travel taxes from three Irish airlines, after the European Commission said the way in which the tax was previously charged gave them an unfair business advantage.

The Commission today said it had concluded that the original way in which the tax was applied – where shorter flights had a lesser tax than longer ones – meant airlines working on shorter routes gained “an economic advantage over their competitors”.

The original travel tax system, introduced in 2009, meant all destinations within 300km of Dublin were subject to the lower rate of tax, at €2 – even if the flight concerned was not departing from Dublin.

This included all domestic flights within Ireland, as well as flights from Dublin to the likes of Manchester and Liverpool – but flights to London and to destinations in Scotland, as well as all flights beyond the UK, were hit with a higher €10 tax.

Brussels said the main benefactors to this system, which favoured flights within Ireland and to nearby parts of the UK, were Ryanair, Aer Lingus and Aer Arann.

The Commission said it had now ordered Ireland to recover this advantage from all airlines that had benefited from it – potentially meaning that the government could be forced to seek taxes in arrears from airlines, who cannot recoup the charge from the passenger.

The tax was reformed in the 2011 Budget – the last passed by the previous government – so that all flights departing Ireland, irrespective of their distance, were subject to a uniform tax of €3.

The Commission had previously taken a separate legal challenge against the two-tier tax system – on the basis that passengers travelling internationally faced higher taxes than those travelling within Ireland – but the complaint was withdrawn last June after the tax was reformed.

The current government has previously pledged to scrap the tax entirely, but only if airlines commit to increasing the capacity of flights into Ireland – a bone of contention between the government and the airlines.

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Gavan Reilly

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