The Minister of Ports and Airports, Silvio Costa Filho, states that he maintains an agenda for dialogue with the Ministry of Finance to make adjustments to the tax reform regulations. “So that the sector is not harmed”, he said during a press conference to present the report on the civil aviation sector.
According to the minister, the government is following with concern the airline sector’s projections about the impacts of the new taxation, especially on the cost of tickets and the demand for flights. Costa Filho stated that the objective of the conversations is to seek solutions that preserve the competitiveness of airlines and avoid negative effects on connectivity and growth in the domestic market.
Studies by the International Air Transport Association (Iata) indicate that the tax reform could cause a reduction of up to 30% in air demand in Brazil, due to the increase in ticket prices. The entity assesses that the increase in the tax burden tends to mainly affect domestic transport, with repercussions on the airline network and the supply of flights.
The reform proposal foresees the adoption of a value added tax (VAT) with an estimated rate of 26.5% for domestic flights, currently taxed between 12% and 18%. International flights, currently exempt, would also be charged at the same rate. IATA’s expectation is that the average price of domestic tickets will rise from US$130 to US$160, while international tickets would go, on average, from US$740 to US$935.
