The Dutch travel tax has been so successful, it has to be scrapped:
The Dutch Government is to scrap from July 1 its air passenger ticket tax, first dubbed the ‘eco’ tax when it was introduced against major opposition by aviation and local industry last year. The controversial departure tax, which ranges from 11 to 45 euros, is blamed for a steep decline in passenger traffic at the main Dutch airports, particularly at Amsterdam Schiphol.
The tax was billed as a “green tax,” meaning that it was intended to raise the cost of flying sufficiently to deter passenger travel — and hence greenhouse gas emissions — on the margin. It apparently did this swimmingly well, better than I would have expected:
Schiphol Airport, Europe’s fifth biggest in terms of passenger enplanements, recorded a drop of 430,000 passengers in February, a 13.7% fall against the same month a year ago. The number of locally boarding passengers fell by 17.7%. The number of transfer passengers, who were exempted from the tax, declined by 8.5%.
As the story notes, this tax was not levied on transfer passengers in an attempt to keep KLM and its Schiphol hub competitive with airlines based at Paris, London Heathrow, Frankfurt, and Copenhagen. Since transfer passengers make up a huge share of Schiphol’s business, the surcharge would never have made much of a dent in the Netherlands’ aviation carbon footprint. The fact that transfer passengers were exempted and that the tax is pulled just when it seems to be working vindicates the complaints that it is a “revenue grab.”
The suspension of this tax also illustrates a tax problem. In an age of free movement across jurisdictional boundaries, tax competition is heightened, especially in areas like the low countries where a competing, lower-tax airport may be just a short drive away. “The airport operator along with Dutch carrier KLM had previously warned that potential passengers would try to avoid the tax by flying from airports across the border in Belgium or Germany,” the story report. “The Belgian Government has already abandoned a proposal to introduce a similar tax.” Unless the EU or a larger jurisdiction is going to impose a charge like this one, countries that impose it on themselves in a global downturn are making an economic death wish.