Passenger Movement Charge

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, immigration 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

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

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

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.

International comparisons

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

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]

IATA

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

• Airport Improvement Fee
• Air Passenger Duty, United Kingdom
• German air passenger taxes
• Air Travel Tax, Ireland
• Australian taxes

References

External links

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