Friday, January 30, 2009

If it moves, tax it!

Much has been made of the hilarious spoof ad from Air New Zealand about low cost airlines.

The airline is right about some of the cons, I mean hidden costs associated with budget airlines.

But there is an even bigger rip-off merchant out there. Not the budget airline, but rather government!

As you know, I have just flown to Prague from Leeds Bradford using a budget airline called Jet2.

Now, the fare posted on the website was around £25 each way, making around £50 for the round trip, or rather £150 for the three of us, which is indeed a bargain.

However! There was also a voluntary charge af around £4 a head because we decided we wanted to book our seats so we could all sit together. There was also a couple of quid to pay using a credit card and another couple of quid as a booking fee! But most disturbingly was a suprise £40 or so charge as a fuel supplement. We also paid £21 for insurance.

There was also government tax so altogether, the bill for three return trips to Prague became £370. Still just over £120 a head wasn't bad.

Nonetheless, we still need to look at government. And government taxes, GST/VAT aside tend to be flat rate, so the same tax will be paid if your Ryanaiir flight costs a penny or £100.

Let us look at other real examples.

What could be nicer than a couple of days in Amsterdam.

Lets look at the website. Leaving Feb 23 , returning Feb 25. Fares 99 pence each way!

But look, there is then a further £49 in taxes!!! What percentage is this? A horrendous amount. What other product has taxes running into several thousand per cent.

Let's pop over to Ryannair then! Whose on for Dublin then? Again 99p fares. But again look at the taxes and fees, which now pushes a £2 return fare to over £55. Still, not a bad deal, but again, see how government is ripping people off. Can such taxes be avoided? No! Even for a domestic flight to Belfast we have £28 in taxes on top of £2 for the flight.

Europe along with many places was beginning to enjoy the though of supercheap airfares but look how government spoils it with such charges.

It's the same with cars. In New Zealand we hear the various taxes amount to half the price of a litre of petrol. In the UK, it used to be around 75-80% until petrol rocketed up in price over the past year. Last week , i read that the UK government takes £45 billion in tax from motorists, but just spends £9 billion on roads. The burden rises yearly and even in 2003, the motorist was responsible for a tenth of government revenues.

Think about it. there is the excise duty on petrol, GST/VAT on petrol, as well as GST on the price of a car, as well as the annual road tax/ vehicle excise duty. A nice little earner.

Indeed, who else is exploited more by government but the motorist or the air passenger?

Yes, Air New Zealand is right in raising the hidden charges of the 'low-cost' airlines, no doubt as a sign of its concern at the business it is losing to them. But the real enemy for the motorist or the air passenger is government. Why do we let them exploit us to such an appauling extent?


Adolf Fiinkensein said...

FFM, I think you'll find the taxes are in fact airport levies which are a set rate per passenger, no matter what the fare.

You'd better be careful with all these 'going crook' blog posts or people might take you for a moaning pom.

Anonymous said...

Here's the future of NZ:

New Zealand will be put on a fast track to joining Australia to rescue the small Pacific state from financial collapse amid rising expectations that it will apply for membership within months, senior policy-makers in Wellington and Canberra have told the Guardian.

Support for swift New Zealand membership was echoed by senior Australian diplomats in Canberra. "We would like to see New Zealand join the Aussie," said one.

The labour government in Wellington, in power for 9 years, collapsed late last year, the first government to fall as a result of the financial meltdown which has wrecked the New Zealand dollar, wiped out savings and pensions, required a massive bailout, sparked unprecedented riots in Auckland, and forced the formation of a caretaker centre-right government until elections can be repeated, probably in May.

Joining Australia will be a central theme of the election campaign, with the National Party - the senior partner in the coalition interim government pushing to join Australia and to swap the Kiwi for the Australian currency as soon as possible.

"The Kiwi (NZD) is dead. We need a new currency. The only serious option is the Aussie Dollar," said a senior New Zealand official.

The financial disaster in New Zealand has triggered extreme volatility among voters. While there is support for joining Australia as a currency safe haven to protect New Zealand from a battering by the markets, there is less enthusiasm for full merger with Australia, particularly among those in the vital sporting sector. This factor has fuelled talk of "unilateral Aussie-isation", meaning that New Zealand might join or use the Australian Dollar without joining Australia . This is dismissed in Canberra as nonsense.

Though deeply indebted and in dire straits, the New Zealand economy is minuscule compared with the main Australian economy and therefore unlikely to prove a destabilising force. New Zealand has already been forced to privitize most of its infrastructure, schools, hospitals, and abandon it's crazily generous welfare system- it will only be admitted if it is unlikely to prove a drain on the Australian budget.

But joining the Australian Dollar is a different question. Despite growing sentiment in New Zealand that Canberra and the Australian currency might be the remedy to the worst crisis the country has seen, the road to the Aussie Dollar is likely to be fraught with problems because of the strict rules governing the Australian Dollar under their reserve bank. Although the economic and financial crisis has seen a loosening of the Australian currency rulebook, current Icelandic interest rates of 0.1% would pose big problems for the rest of Australia.

Already Country-Liberal MPs in the New South Wales, the party of the prime minister, are openly critical of New Zealand's ambitions. Such hostility might increase but senior figures in the Australian government believe that New Zealand brings more assets than liabilities to Australia.

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Indeed such taxes are per passenger, and can be one of the many 'hidden charges' as mentioned here.

The issue is, at least in the UK, how the tax was introduced in 1994 and then greatly increased under Labour.
The issue is, is such a charge fair or excessive?

They have risen much in recent years. Is the air passenger another cashcow for government, just as the motorist is?

Heine said...

It has risen very quickly. My ticket to Prague last year cost £30 but taxes were £50. And yet a few years ago the taxes were far lower.

Falafulu Fisi said...

I think that post's title was a Ronald Reagan's quote:

The government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

Ronald Reagan.