Trade & investment

World business group hits taxes on airlines and users

  • 7 May 1997

The International Chamber of Commerce today criticized governments for imposing hundreds of new taxes on airlines and users and said these charges had a distorting effect on world commerce and travel.

The ICC, which represents business throughout the world, said in a statement: “The situation is clearly getting out of hand. It is time to reverse the trend to heavier taxation on airlines and passengers and to recognize that the benefits that all economies obtain from air travel will be seriously reduced if present trends continue.”

Approved unanimously by the ICC’s Air Transport Commission, the statement pointed out that there were now more than 1,087 instances of taxes and fees imposed on airline tickets, up from 650 in 1992. These include taxes for programmes ranging from agricultural fees to immigration, most of which have little to do with air transport.

“Clearly, government authorities still labour under the misguided belief that air transport is reserved for a chosen elite; in fact, it is the fundamental mode of long-distance transport for many people worldwide and a necessity for modern economies,” the ICC said.

Among taxes cited are Britain’s Airline Passenger Duty (APD) of £5 sterling charged on each airline departing from a UK airport, a tax which will rise to £10 on 1 November. “There is no pretence that the funds collected will be used for purposes other than to reduce the general budget deficit,” the ICC said.

Other examples include Lithuania’s 18% value added tax imposed on incoming tourists, Greece’s US$ 25 tax on airline tickets for each passenger departing from a Greek airport, and a range of US taxes on passengers – for purposes ranging from immigration fees to Department of Agriculture inspection charges.

Jeffrey Shane, Chairman of the ICC Air Transport Commission, and former US Assistant Secretary of Transportation, called the current situation “appalling” and said: “The benefits that all economies obtain from air travel will be seriously reduced if present trends continue. Governments must stop treating airlines and their customers as a collective cash cow.”

The ICC called for the elimination of all airline ticket taxes not strictly related to air transport needs. It maintains that no government should use airline taxes to reduce budget deficits or to pay for airline and airport security. “The state, not airlines or users, is the target of terrorism,” the ICC said.

A further recommendation is that governments eliminate the practice of collecting taxes from users at airports: “This practice causes confusion and delay and has a particularly detrimental effect on the business traveller who may be hurrying to catch his flight.”

The ICC said it recognized that some limited charges on airline tickets, particularly those directed to improving the air transport infrastructure, may be justified. But the scope of current taxes went far beyond that restricted purpose.

The statement said: “Passengers no less than goods represent exports and imports. Government action to increase the prices paid by passengers creates