Australian PM bows to industry pressure on air passenger tax

The Australian government has retreated on plans to follow the UK in imposing an annual rise in departure tax on air passengers following a tourism industry campaign.

Australia’s federal government will go ahead with plans for a 17% increase in the passenger movement charge levied on departing passengers.

However, it has dropped proposals to raise the tax annually by the rate of inflation.

The charge is added to fares on flights from Australia at the point of booking in the same way as UK Air Passenger Duty (APD).

The Australian government has also agreed to double the proportion of the tax revenue set aside for a “stimulus fund” to aid regional tourism development. This will increase from 10% to 20% of the passenger movement charge.

None of the revenue raised from UK APD is used for tourism, transport infrastructure or environmental measures. The Australian travel industry launched a national advertising campaign against the tax increase in mid-June, in an echo of the UK industry’s battle over APD.

The Australian Federation of Travel Agents, retailer Flight Centre, the country’s National Tourism Alliance and industry lobbying group the Tourism and Transport Forum paid for full-page adverts in major newspapers accusing the government of a “cash grab”.

Tourism and Transport Forum president John Lee hailed the campaign as unprecedented. He said: “This is the first time the tourism industry has joined together to place an ad related to prices.”

He described the outcome as “positive” and “a victory for common sense”. “This will see over A$40 million allocated to boost regional tourism,” he said.

Australian prime minister Julia Gillard had argued increasing the tax on air passengers would raise revenue without hurting tourism. The passenger movement charge will rise by eight Australian dollars (A$) from A$47 (£30) to A$55 (£34) next Sunday, July 1.

The UK industry coalition A Fair Tax on Flying launched its biggest campaign to date a week ago as it seeks to persuade 100,000 people to write to their MPs demanding action APD. The coalition, comprising more than 30 airlines, airports, tour operators and trade bodies, wants the campaign extended to customers.

Campaign organisers want supporters to visit and enter their postcode. This generates a letter to their local MP to which they can add their name and submit.

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