The International Air Transport Association (IATA) has expressed its objection to a plan by the Bali administration to impose a levy on foreign tourists that may be included in airline tickets.

The group, which represents more than 290 airlines accounting for 82 percent of total global air traffic, has sent a three-page letter to Bali Governor I Wayan Koster regarding the plan.

“The imposition of a foreign tourist levy [or similar tax] would directly contradict accepted policies on taxation published by the International Civil Aviation Organization (ICAO), a specialized agency of the United Nations,” IATA regional vice president for Asia Pacific Conrad Clifford wrote on Jan. 24. A copy of the letter was made available to The Jakarta Post.

Clifford stated in the letter that Indonesia, as a signatory nation to the Convention on International Civil Aviation (Chicago Convention) and an ICAO contracting state, was obliged to adhere to Article 15 of the convention, which stipulates that “no fees, dues or other charges shall be imposed by any contracting state in respect solely of the right of transit over or entry into or exit from its territory”.

The Bali administration has drafted a bylaw on tourist contributions for environmental and cultural preservation, which has been discussed with the Bali Legislative Council since December.

The council and the administration are considering whether the levy should be included in airfares or collected at special counters at the airport. The first option is seen as more feasible with the help of airlines.

Clifford said that Indonesia should adhere to policies on taxation stated in the Field of International Air Transport contained in ICAO Document 86322, which states that “each contracting state shall reduce to the fullest practicable extent and make plans to eliminate […] all forms of taxation on the sale or use of international transport by air, including taxes on gross receipts of operators and taxes levied directly on passengers or shippers”.

“It is worthy to note that departing international passengers from Denpasar airport in Bali currently pay the passenger service charge in the amount of Rp 225,000 [US$15.90] related to the provision of passenger and security services. As such, air passengers are already paying for the aviation services they utilize and should not be forced to remit more than their fair share in tax receipts with the introduction of the [planned] levy,” he said.

Clifford said without adherence to the various ICAO principles, international aviation would become financially overburdened by excessive and unjust taxation, which in turn would significantly limit the economic and social benefits generated by air transportation.

According to Statistics Indonesia (BPS), more than 6 million tourists arrived in Bali in 2018, increasing from 5.7 million in the previous year. About 22.43 percent of foreign tourists last year came from China, while 19.26 percent visited from Australia. Others came from India (5.8 percent), the United Kingdom (4.7 percent) and Japan (4.3 percent).

The Bali Council member leading the special team on drafting the levy bylaw, I Ketut Suwandhi, said the team would meet IATA representatives to discuss the plan.

“We will have a meeting with IATA to discuss it. We will try to find the best solution,” said the Golkar Party politician.

Other countries are also known to impose taxes on travelers. Japan has started to collect a departure tax of 1,000 yen ($9.10), known as the Sayonara Tax, from people leaving the country by plane or ship. Unlike the levy planned by the Bali administration, however, the Japanese levy applies to both domestic and foreign travelers.

Jakarta-based aviation analyst Gerry Soejatman said the government must first declare that it did not want to obey the articles in the Chicago convention before issuing the bylaw and then be prepared for a backlash.

“The government may get negative reactions from many aviation companies flying to Bali,” he told the Post on Tuesday.

Gerry also said the Bali government should impose levies on foreign tourists on location instead of charging them through airline tickets. He said many countries had done the same.

“To be honest, I understand that they need this in a bid for environmental and cultural preservation, but this should not be the way to do that,” he said.

“I wonder if foreigners who fly to Bali from other Indonesian cities would also be charged if the draft becomes law,” Gerry added. (das)

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