Air travel tax may surge

For the first time, domestic air travellers are likely to face a travel tax while people going abroad on airplanes are expected to pay up to 67 per cent higher taxes from next fiscal year as the government looks to increase revenue collection.

The spike is expected to come after nine years as the National Board of Revenue (NBR) had last increased the rate in 2014. As per the plan, domestic air passengers may require paying Tk 200 as travel tax, said officials of the finance ministry. In case of international travel, the rate of tax may rise 50 per cent to Tk 6,000 for travels to the Americas, Europe, Africa, Australia, New Zealand, China, Japan, Hong Kong, North Korea, Vietnam, Laos, Cambodia and Taiwan.

At present, an air passenger pays Tk 4,000 as travel tax when travelling to these destinations, according to the NBR.

The amount of tax for people going to member countries of the South Asian Association for Regional Cooperation (Saarc) is expected to increase 67 per cent to Tk 2,000 from the next fiscal year, which begins in July.

Air passengers to other countries and regions, such as the Middle East, the main destination of Bangladesh's migrant workers, may require paying 33 per cent higher in travel tax to Tk 4,000 on their tickets, according to the plan.

"We are considering increasing travel tax as the current rate is low. We have kept the rates unchanged for the last nine years," said a senior official of the finance ministry.

The move comes at a time when air travel has recovered on the back of pent-up demand from migrant workers, non-resident Bangladeshis and the upper-middle-class segment as countries have eased Covid-19 curbs. This has also led to a surge in the NBR's collection from travel tax.

In the nine months to the end of March during fiscal year 2022-23, travel tax collection shot up 94 per cent to Tk 1,069 crore, higher than the tax authority's target for the whole fiscal year.

The latest data regarding air travel is not available. Figures of the Civil Aviation Authority of Bangladesh (CAAB) showed that roughly 50 lakh people travelled abroad by air in 2022, which was 145 per cent higher from 20 lakh a year ago.

Meanwhile, the number of domestic travellers soared 70 per cent year-on-year to 50.5 lakh in 2022.

The hike in travel tax will discourage passengers, said Kamrul Islam, general manager for public relations at US-Bangla Airlines Ltd. Domestic air travellers now pay a total of Tk 725 in various taxes, he said.

"This will disappoint a section of passengers. Airlines will suffer as the spike may discourage travel," said Islam of the local private airline, which operates flights on 11 international destinations including Dubai, Kuala Lumpur, and India. The 19-fleet carrier also flies to eight domestic destinations.

The finance ministry official said the amount of travel tax planned to be imposed on domestic air passengers was low. "This is unlikely to affect domestic travel as the middle and upper-middle income people mainly fly by air," he said.

Apart from air travel, people who will go abroad by road, for instance to India, are expected to pay a travel tax of Tk 1,000, double the existing rate. In case of travel by waterways, the rate of travel tax may rise 25 per cent to Tk 1,000 per person from next fiscal year, according to the officials.

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