Morocco Warned Against "Counterproductive" Aviation Tax
20 January 2014
Posted by: Author: Lorys Charalambous
Author: Lorys Charalambous (Tax-News.com)
The International Air Transport Association (IATA) has warned the Moroccan Government against plans to introduce its new aviation tax, insisting that the levy will merely prove counterproductive, resulting in a revenue shortfall for the state and risks to jobs.
The Moroccan Government aims to impose a tax of MAD100 (USD12) on economy class tickets and MAD400 on first or business class tickets, for flights departing from Morocco from April 1. Revenue derived from the tax is to flow directly to the Moroccan National Tourist Office, to promote tourism in Morocco.
In a letter addressed to the Moroccan Tourism Ministry, IATA argued that the tax will significantly affect competitiveness, increasing ticket prices by on average 2.2 percent. According to IATA, this in turn will reduce the number of tourists travelling to Morocco by plane, by an estimated 2.3 percent. The levy will lead to a revenue shortfall for the Moroccan Government of a forecast MAD1.1bn, endangering 13,000 jobs, the body cautioned.
Furthermore, IATA pointed out that Morocco's new aviation tax will violate International Civil Aviation Organization (ICAO) policy. During the ICAO's Sixth Air Transport Conference, the Moroccan Government pledged to respect a working paper, calling for the elimination of taxation on air travel where revenue is not reinvested in infrastructure. The Government also vowed to adhere to the Conference recommendation that states avoid imposing "discriminatory" taxation on aviation and avoid double taxation of the industry.
Concluding, IATA made clear that the levy will undermine progress made so far and prove damaging to both social cohesion in Morocco and to the country's economy in general.
This article first appeared on tax-news.com.