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€1.5 Billon Loss to Economy “Regrettable?”

Airplane_ClosedAs an ice cream man and not an economist, I’ve been trying to avoid getting angry about how the current economic mess is being handled in this country, but that is becoming increasingly difficult. The government seems to have only two plans of action: 1. Slash as much money as possible from their budget, and 2. Force through NAMA (a done deal, really, since sadly the Greens are supporting it).

What’s troubling to me is that there is very little debate about the economy outside of these two points. Yet fixing the budget is fairly meaningless unless the economic slide stops, since any cuts will be offset by falling revenue, and the economic impact of NAMA is unclear – even if the banks do offer more credit after the bailout, will people and businesses spend?

Meanwhile, there are so many aspects of our economy that need help. In just one example, Ryanair looks like it will pull most of its routes out of Shannon because the airport fees and government taxes are too high, which will mean 1.5 million fewer tourists to the West of Ireland. Airport director Martin Moroney called the pull-out  ”regrettable.”

Regrettable? 1.5 million tourists have a heck of a spend. People flying into Shannon wouldn’t tend to be “weekenders.” I would guess their average stay is at least a week, and their average spend is at least €1,000. That would mean €1.5 billion lost to the economy. That’s more than “regrettable.”

Ryanairgraph-sm

So why wont the government negotiate? Is it because they are offended by Michael O’Leary? Is it stubborn pride? Even if you don’t look at the larger economic impact and just look at government revenue, it should be an easy decision. I made up a chart to show tax revenue  from the airport tax (€15 million) vs. estimated VAT based on 1.5 million tourists with a €1,000 spend (€225 million). Of course, the government would be gaining far more –  the €225 million is only VAT and doesn’t include the payroll taxes of all the people employed to serve the 1.5 million tourists, the avoidance of dole payments, etc.

Whatever one might think about Michael O’Leary, it seems to me that the government should be crawling to him begging him to keep the routes, even if it means rowing back on their precious departure tax. Sadly, there is little sign of such humility and vision from this government…

4 Responses to “€1.5 Billon Loss to Economy “Regrettable?””

  1. November 2nd, 2009 at 5:07 pm

    Séamus says:

    Sad state of affairs, perhaps Cork could pick up some of that slack, not sure. Things are not looking good for the west of Ireland.

  2. November 3rd, 2009 at 12:25 am

    john says:

    We seem to be very efficient in this country at implementing new taxes. On the one hand, the government express “Read my lips, no tax hikes”, while on the other they deliver new ones – non principal private residence, property tax, water, carbon. If we had saved for this rainy day, they’d be taxing umbrellas.

  3. November 5th, 2009 at 4:11 pm

    Frank Mc Nulty says:

    Don’t let the economy get you down. Weather the weather is good or whether the weather is bad , we’ll weather the weather whatever the weather, whether we like it or not.

    The tune of an ice-cream van was always something people reached into their bare purses for.

    Optimism, however blind, is ingrained in our Irish souls.

  4. November 8th, 2009 at 1:30 am

    Pierre says:

    The department of justice of ROI has very discreetly stated on its website that the citizens of Mauritius will need a visa to visit the Republic of Ireland.

    Citizen of Mauritius can currently visit the 27 countries of the European Union (U.K and R.O.I included) without a visa.

    But now they will have to spend 60 Euros for the visa fee, send their passport from Mauritius to Dublin (100 Euros of DHL/FedEx/UPS) and wait up to 2 months to get their precious C-visa for a visit.

    Guess what ? They are not going to apply for the visa and visit the rest of Europe, there is plenty to see…and 160 euros to save.

    And for the one who really want to visit family and friends living in the Republic, a quick flight to Belfast then a good bus ride to the Republic, will make them save the 10 euro airport tax and the 160 visa tax..

    But I guess the Republic don’t need tourists now..

    If you want to give your opinion on this new visa requirement, you can vote on the poll on ecvisawaiver.wordpress.com .

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Kieran Murphy is a director of Murphys Ice Cream living in Dingle, Co. Kerry, Ireland.

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Murphys Ice Cream has shops in Dingle, Killarney and Dublin 2 (Wicklow Street).