‘LEVY UNLIKELY TO IMPEDE AIR TRAVEL’
Departure tax will allow govt to further develop aviation infrastructure, says analyst
SOME market observers are not overly pessimistic about the government’s proposal to impose a departure levy for all outbound passengers, possibly to be enforced after the this year’s haj season.
Although the government has yet to iron out the tax rate, it was reported that the departure tax of RM20 would be charged on all international departures to Asean countries and RM40 to other international destinations.
Aviation experts believed the levy would allow the government to widen its revenue base and was in line with the intention to diversify its revenue sources.
They said the initiative would provide a “surplus” to the government’s income.
Maybank Investment Bank Bhd aviation analyst Mohshin Aziz said the levy would enable the government to further develop the country’s aviation infrastructure in terms of human capital (education) and airport facilities.
“Therefore, this will improve the overall operational efficiency at airports. The departure levy is more targeted at the population who are capable to pay tax rather than a blanket tax.
“This is the government’s rationale to have targeted taxing mechanism, especially for those who use the airport facility,” he told the New Straits Times on Friday.
Mohshin is hopeful that the tax collection will be channelled into local airports, especially on expanding congested airports and better radar and satellite navigation systems.
“Better aviation infrastructure will improve the airports and airlines operating in the country, such as seamless passenger flows at check-in counters and smoother aircraft takeoff and landing.”
He said the tax collection could also be used to take the aviation industry to a greater level, such as training for pilot, cabin crew, engineers and air traffic controllers.
Mohshin said the levy would not likely impede air travel growth, citing that Hong Kong and Singapore already imposed transit, departure and developments taxes at their airports, respectively.
“The air traffic growth in those countries has not been severely impacted. Rather, they have maintained their growth on a yearly basis.”
Sunway University economics professor Dr Yeah Kim Leng concurred that the levy would not impede air travel growth locally, adding that the taxing mechanism would improve the government’s income.
“Passengers do not mind paying a departure tax as long as they can get better quality services and connectivity,” he added.