- Aviation sector is €160 million larger in 2030
- 2.3 million new arrivals; €460 million additional tourism spending by 2020
New results from a PricewaterhouseCoopers LLP (PwC) study, The economic impact of abolishing aviation taxes in Austria reveal sizeable increases in Austrian GDP in the years following a complete abolition of the Air Transport Levy passenger tax. In March 2017, the Austrian government reduced its Air Transport Levy by 50 per cent, with new rates effective 01 January 2018. In this context, the PwC study also examined the projected impact of this latest reduction in its report.
Under the full abolition scenario, GDP would increase by €320 million per year in 2030 (compared with no change to the 2017 baseline/taxes levied). In addition, some 1,000 jobs across all key sectors of the Austrian economy would be created by 2030, already 600 in the first two years following the implementation. Finally, Austria’s aviation sector would also see an uplift — reaching €160 million per year in 2030.
Tax cut benefits would also have a direct positive impact on Austria’s tourism and commerce industries, bringing in 2.3 million new arrivals by 2020 and having spillover effects on other associated industries, such as agriculture, transportation, manufacturing and financial services sectors.
“We welcome the Austrian government’s decision to cut the Air Transport tax in half. This is good news for travellers and for Austrian commerce alike. That said, the reduction does not go far enough. The PwC findings reinforce our call for a complete abolition of the tax in order to maintain a competitive travel market and continue to drive future growth”, said Thomas Reynaert, Managing Director, Airlines 4 Europe.
Under both tax cut scenarios, real GDP increases the year immediately following the tax cut (relative to the baseline scenario of no change) — however with clear differences in terms of the impact. For example, under the full abolition scenario, net tourism expenditure would increase to €196 million per year in 2030 compared to €91 million in the half scenario.
“Over the past ten years, the 87 per cent increase in Vienna’s bednights from overseas has been twice as high as growth from Europe. This shows how extremely dependent tourism in particular — but also the associated economic sectors are, on being reachable by air. In fact, the boom in city tourism in recent years would not have been possible without airlines. Abolishing the ticket tax would be one means of achieving many benefits for the location, the economy and the labor market, as well as ensuring fairness in global competition”, said Vienna’s Director of Tourism, Norbert Kettner.
Note to Editors
This report is part of a broader set of reports commissioned by Airlines for Europe in which PwC provides an independent overview of the current air passenger taxes in Europe and an assessment of their economic impact using a Computable General Equilibrium (CGE) model, which is used by institutions such as the IMF, World Bank, OECD and several national governments to quantify the economic impact of policy changes.