South African air travellers face wave of new taxes

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South Africans who travel by air could face a variety of new taxes over the coming months and year as plans are made for increases in the passenger safety tax and air passenger tax, and the introduction of a new carbon tax.

Around half the cost of a plane ticket actually goes to the airline; the rest consists of a fuel surcharge and taxes including VAT (14%), a passenger service charge, which the airport takes, and a passenger safety charge. If a passenger leaves the country, he or she also has to pay an air passenger tax (departure tax).

As of March 1, the passenger safety charge was raised to R12 per passenger. The Government Gazette of March 25 carried a notice from the South African Civil Aviation Authority (SACAA) proposing the passenger safety charge be increased to R18 per person for the 2011/2012 financial year.

The increase would be, “used to assist SACAA to comply with its statutory mandate, which includes safety and security oversight on various entities and certificate/licence holders for the benefit of travellers. This proposed increase comes at a time when general, recreational and commercial aviation is experiencing financial pressures and SACAA is mindful of this,” the government notice read.

The SACAA said the R6 increase would be a softer approach to increasing user fees that would impact recreational and general aviation sectors. The SACAA said it was working on developing a ‘proper Financial Model’ to plan future tariff adjustments over a four year cycle.
“SACAA humbly implores the industry and the public to pledge their support for the proposed PSC increase,” the organisation stated.

Civil Aviation Authority spokeswoman Phindiwe Gwebu told The Mercury that the tax money was necessary for the replacement of deteriorating infrastructure. She added that R18 was the “most reasonable amount reached” that would not burden the aviation industry.

According to the South African National Consumer Union (Sancu), the proposed passenger safety charge increase would cost consumers R100 million a year. The amount was extrapolated from the Airports Company of South Africa’s figures of 16.5 million departing passengers reported for last year. However, this figure does not include traffic from private airports like Lanseria.
“What really galls is there is no guarantee that this (tax) will be used to promote passenger safety on scheduled flights,” Sancu vice chairman Clif Johnston told The Mercury.
“Consumer bodies like Sancu were not consulted, nor do there appear to be any consumer representatives serving on the committee recommending the increase,” he said.

Sancu has sent an objection to the SACAA, saying that flying is an activity engaged in by all income groups and not a luxury that could be taxed selectively.

The government is planning on introducing a carbon tax from 2012, amounting to R75 per tonne on carbon dioxide emissions. The proposed tax was first announced in December last year and in March the treasury said it was working on plans to take the tax forward. Full details are expected to be announced in the 2012 budget address.

The carbon tax has met with some opposition. According to Giovanni Bisignani, CEO and Director General of the International Air Traffic Association (IATA), “South Africa is a particularly carbon-intensive destination and relies extensively on long-haul flights from key international tourism markets. Putting a tax on aviation would put in jeopardy the very substantial benefits delivered to SA’s society and economy which far outweigh any additional tax revenues.”

In addition, the air passenger tax may be raised from R150 to R190 per passenger on international flights and R100 on regional flights, representing a 27% increase on international flights and 25% to SA Customs Union States (Botswana, Lesotho, Namibia and Swaziland). The increased air passenger tax would come into effect from October 1.
“The airline industry is currently struggling with the impact of cost increases brought about by tariff increases…increased ATNS [air traffic and navigation services] charges as well as escalating fuel costs. The volatile state of the industry means that further cost increases are likely to be absorbed by many of the airlines themselves. We believe that the proposed tariff increases need to be reviewed urgently to ensure the sustainability of the airline industry in South Africa,” said Chris Zweigenthal, Chief Executive of the Airlines Association of Southern Africa.



Meanwhile, the Airports Company of South Africa last year proposed a 133% tariff increase, which its Regulatory Committee declined, ruling instead that the airports authority be allowed to increase its tariffs by 40.7%.