Passenger Movement Charge

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The Passenger Movement Charge (PMC) is an excise tax levied by the Australian government on all passengers departing on international flights or maritime transport. The PMC replaced the departure tax in 1995 and was initially described as a charge to partially offset the cost to government of the provision of passenger facilitation at airports, principally customs, immigraion and quarantine functions.[1] It is classified by the International Air Transport Association as a departure tax, rather than an airport charge, as its revenue does not directly contribute to passenger processing at airports or sea ports.

History[edit]

The tax is administered by the Australian Customs and Border Protection Service and levied on ticket sales for all persons over 12 years of age leaving Australia.[2] The charge is typically included within the price of the air fares and remitted by airlines on behalf of individual travellers. The tax applies to passengers leaving Australia by air or sea travel.

The PMC is levied under the Passenger Movement Charge Act 1978 having replaced the departure tax in 1995.

In the June 2012 Australian federal budget the rate of the Passenger Movement Charge was increased by the Australian government from A$47 to its current rate of A$55.[3]

1978-1995[edit]

Introduced in 1978, the A$10 departure tax's initial stated aim was to recover costs associated with passenger processing at Australia's air and sea ports. In subsequent budgets the departure tax was linked to the promotion of tourism either through marketing or through the removal of a cost barrier to travel as in 1988.

The departure tax was increased to A$20 in 1981, but then reduced to A$10 in 1988 to stimulate the tourism industry. In 1991 the rate was increased to A$20 to fund a A$20 million tourism promotion package in an attempt to counter the negative impact of the pilots' dispute of 1989. The departure tax was raised again in 1994 to A$25 to offset the additional cost of tourism promotion expenditure, specifically an additional A$80 million allocated to the development of new tourism products.

1995-2012[edit]

Since its name change to Passenger Movement Charge in 1995, the rate of the Passenger Movement Charge has been changed on several occasions. In most cases the Australian federal government has supplied a rationale for rate increases.

Year Rate Rationale
1995 A$27 To offset the cost of customs, immigration and quarantine processing at Australia's borders and the cost of issuing short-term visitor. visas.[4]
1998 A$30 To meet the additional costs associated with the transit of people and goods for the Sydney 2000 Olympic Games.[5]
2001 A$38 To fund increased passenger processing costs as part of Australia’s response to the threat of the introduction of foot-and-mouth disease.[6]
2008 A$47 To partially fund national aviation security initiatives.[7]
2012 A$55 No reason provided.[8]

International comparisons[edit]

Australia's departure tax is one of the highest in the world. Few jurisdictions levy taxes on departing international passengers, although some charge airport fees to cover the cost of provision of government agency servies at the frontiers. In 2013 Australia was ranked 130 out of 140 countries for its relative cost of ticket taxes and airport charges in the World Economic Forum's Travel and Tourism Competitiveness Report.[9]

As of May 2013, only Fiji's Airport Departure Tax, at F$150 (approximately US$85) and the three long-haul rates of the UK's Air Passenger Duty reduced rate at £67-£94 (or approximately US$105–143) for travel in lowest class or standard rate at £134-£188 (or approximately US$210–286) are higher departure taxes than Australia's.[10]

Ghana's Airport Passenger Service Charge, at GH₵200 (approximately US$100) has been reclassified as a charge, not a tax, after the government announced in March 2013 the charge would be 100% hypothecated towards funding airport infrastructure.[11]

The New Zealand government recoiled from a plan to follow Australia in imposing a departure tax. Cabinet papers show the government planned to implement a NZ$35 border charge in its May 2013 budget, but withdrew from the plan after the country’s Economic Development Ministry found the tax would have run counter to New Zealand’s tourism promotion efforts.[12] This was particularly true of travel from Australia, the ministry's modelling found.

OECD[edit]

The PMC is the second highest departure tax among the members of the Organisation for Economic Co-operation and Development (OECD) after the United Kingdom Air Passenger Duty's long haul rates (see table). For travel of less than 3,200 km the PMC is the highest in the OECD.[13]

Country Tax Rate (short haul) Rate (long haul)[14]
United Kingdom Air Passenger Duty economy class Band A (0–3220 km) reduced rate at £13 (US$19.70) for travel in lowest class or standard rate at £26 (US$39.40) Band D (>8000 km) reduced rate at £94 (US$142.70) for travel in lowest class or standard rate at £188 (US$285.40)
Australia Passenger Movement Charge A$55 (US$57.50) A$55 (US$57.50)
Germany Luftverkehrsteuergesetz Band A countries €7.50 (US$9.65) All other countries €42.18 (US$52.97)
Austria Flugabgabegesetz Band A countries €8 (US$10.25) All other countries €35 (US$45.00)
Mexico Derecho de No Inmigrante Mex$294 (US$23.80) Mex$294 (US$23.80)

IATA[edit]

In June 2013 the International Air Transport Association released an economic briefing showing the damage the PMC does to the Australian economy. Its analysis showed that by abolishing the A$55 charge, it would equate to a 3.5% drop in average ticket price on airfares to Australia, which would result in an increase of 2.5% in international passenger traffic to Australia (based on an elasticity of demand of 0.7).[15] The additional benefit the additional visitors would contribute to the Australian economy is estimated at A$1.7 billion. This would result in net benefit to the Australian Treasury even accounting for revenue loss.

See also[edit]

References[edit]

  1. ^ Passenger Movement Charge, Australian Customs Service Performance Audit, Audit Report No. 12 1996-97, Tabled 1 August 1996 [1]
  2. ^ The Australian Customs and Border Protection Service information page on the Passenger Movement Charge [2]
  3. ^ Passenger Movement Charge Amendment Bill in the House of Representatives - Minister of Resources, Energy and Resources statement [3]
  4. ^ Departure Tax Collection Amendment Act 1994 No. 159, 1994
  5. ^ Bills Digest No. 223 1997-98 Passenger Movement Charge Amendment Bill 1998 [4]
  6. ^ Passenger Movement Charge Amendment Bill 2001
  7. ^ Passenger Movement Charge Amendment Bill 2008
  8. ^ Passenger Movement Charge Amendment Bill 2012
  9. ^ Travel and Tourism Competitiveness Report 2013
  10. ^ IATA Customs, Currency and Airport Tax regulations by country
  11. ^ Government of Ghana official website - Airport Passenger Service Charge [5]
  12. ^ Govt dumped departure tax plan, by Vernon Small. Stuff.co.nz 20 May 2013 [6]
  13. ^ The Passenger Movement Charge Explained, Tourism Taxes in Australia series. Tourism & Transport Forum [7]
  14. ^ The Passenger Movement Charge Explained, Tourism Taxes in Australia series. Tourism & Transport Forum [8]
  15. ^ IATA Economic Briefing - The Economic Benefits Of Abolishing The Passenger Movement Charge In Australia [9]

External links[edit]

  • Passenger Movement Charge, Australian Customs and Border Protection [10]
  • Passenger Movement Charge Explained, Tourism Taxes in Australia series, Tourism & Transport Forum [11]