As stated during my Tourism Budget Vote in Parliament, the sad reality is that many South Africans cannot afford to travel in their own country. And with the increase in VAT, it will continue to put more South Africans under pressure in terms of their finances, again affecting the poor.
This increase in VAT impacts on the entire tourism value chain. Products and services are adversely affected. Transportation costs have gone up. The knock-on effect with regard to pricing on consumers will continue to rise, with fewer people having enough money to travel.
Speaking of taxes and their impact on tourism advancement, this brings me to an important matter. I raised it before and nothing has been done. But it requires urgent intervention. I am referring, of course, to the excessive aviation taxes, which, according to research, make it difficult for many South Africans to travel by air.
The International Air Transport Association predicts that by 2034, an estimated 7.3bn people will be taking to the skies, more than double the 3.5bn of 2015. In order to cope with this demand, airlines and countries need to have forward-thinking policies that will make provision for cost-efficient infrastructure and support business growth.
Therefore my proposal is for the Department of Tourism to establish a strategic aviation committee to investigate how aviation taxes can be streamlined to stimulate tourism growth. The fuel levy and other taxes need to be evaluated in terms of direct benefit to aviation and the opportunity costs associated with it.
The following taxes and user charges are levied at the moment: passenger safety charge, SA departure tax, SA passenger service charge, fuel surcharge, and VAT on the ticket price. Let me hasten to say that, in general, we conveniently speak of all the above taxes as “airport taxes”, which is incorrect (approximately 20% goes to the airport).
Tony Tyler, CEO of Iata (2011-2016), cautions by saying that “ill-conceived taxes will quickly short-circuit the benefit of healthy, connected and growing economies for governments, consumers and businesses alike”.
Thus, one way to achieve this objective is to reduce aviation taxes as a way of lowering the cost of air travel so that more South Africans can travel at an affordable rate.
Therefore it is more important than ever for this committee to explore ways to minimise the impact of taxes on domestic air travel.
My initial appeal was based on the responses provided by the former Minister of Transport, Dipou Peters, to my parliamentary question that confirms her uncertainty of the impact the proposed carbon tax would have on the cost of domestic air travel, and that carriers would be left to determine how its introduction would affect travellers. Furthermore she also indicated that the proposed carbon tax would only apply to domestic and not international aviation.
It is disconcerting that the government would select to levy more costs on domestic travellers through a carbon tax despite the fact that domestic tourism is on the decline, and that domestic tourists contribute a greater share of expenditure to the tourism industry than their international counterparts. This makes domestic tourists the main drivers of economic growth and job-creation in the tourism industry.
The aim should be to lower the cost of air travel so that more South Africans can travel at an affordable rate.