A4E “astonished” at Norway’s new passenger tax

At a time when many European countries are looking to reduce indirect aviation taxes, many are shocked at the announcement that Norway will be introducing a passenger tax (flypassasjeravgift) of NOK80 this summer to be paid by departing passengers, whether on domestic or international flights. A4E, who since its inception has campaigned against such taxes in Europe, has condemned Norwegian authorities, with Managing Director Thomas Reynart saying: “We are astonished about the unwavering approach of the Norwegian authorities on implementing the Air Passenger Tax while almost all comments during the public consultation period contained objections to it. Instead of preventing economic growth and job creation by imposing unreasonable taxes, European governments should create a supportive regulatory environment.”
Reynart then added: “Unavoidably, the proposed tax will lead to fewer operators in the Norwegian aviation market and reduced competition. If already [sic] the Norwegian competition authority states that airports may have to consider ceasing their operations due to reduced traffic the government deliberately wants to stifle the travel sector.”
Based on IATA analysis, this new passenger tax risks reducing all-round demand for air transport by some 5%, which equates to approximately 1.2 million passengers annually. The tax would likely lead to a NOK1.4 billion reduction in both direct and indirect output of the aviation sector. It should be noted that as soon as the Italian government raised passenger taxes by €2.50 at Italian airports, a number of carriers repositioned their planes at airports outside Italy, thus damaging the Italian economy.
In the opposite side of the fence, when the Dutch removed their ticket tax in 2009 passenger numbers grew, while an 8% increase in tourism last year resulted from the Irish government’s abolition of the traffic tax and saw an immediate increase of 52% for the number of Northern Ireland residents flying out of Dublin. While the removal of a UK passenger duty (APD) would see a 1.7% boost to the British GDP, according to analysts, in Scotland alone APD is estimated to cost the economy over €90 billion in lost tourism by 2020 – one reason why it is about to be halved, before being removed completely. It is also estimated that the removal of ADP in Scotland would add €1.3 billion to the economy, while also helping to create 4,000 jobs.