The Ministry of Transportation and Communications has allocated several rounds of funding to domestic travel subsidies and COVID-19 bailouts, and has spent the Tourism Development Fund — more than NT$10 billion (US$346.12 million) — in just two years. As debt financing might be required to keep the fund operational, the issue needs to be discussed.
Since the ministry took charge of tourism affairs in 1972, it has disbursed 60 percent of the airport service fee for the development of tourism facilities. To raise funds for new facilities at Taiwan Taoyuan International Airport, the ministry in 2015 increased the airport service fee from NT$300 to NT$500 per passenger.
Although it has nominally reduced the proportion of the fee allocated to tourism from 60 to 50 percent, the annual allocation to tourism has risen by nearly 40 percent thanks to the increase in the amount of airport service fees collected, from NT$3.6 billion in 2014 to NT$6.7 billion last year.
Spending on tourism facilities falls yearly as facilities are completed, giving the Tourism Development Fund an annual surplus of NT$2 billion. By 2018, the accumulated surplus was nearly NT$10 billion, making the fund the biggest beneficiary of the bid to finance airport construction.
As revenue from tourism facilities has also been increasing each year, there is no longer any need for a large percentage of the fund to be allocated to tourism, but visitor volume has spiked, triggering a need for airports to be expanded and upgraded.
The construction of Terminal 3 at Taoyuan airport has involved expropriating 700 hectares of land, as well as building a third runway and other facilities. The project, along with the renovation of the domestic terminal at Kaohsiung International Airport and the expansion at Taichung International Airport, is likely to cost about NT$300 billion.
As the need for tourism facilities is declining and the need for airport facilities is rising, it is time to review the disbursement of airport service fees.
As the number of Chinese tourists fell last year, the ministry spent NT$5 billion on domestic travel subsidy programs in January, March and September last year, but the results were limited.
The ministry should review the needs of foreign tourists and develop measures more likely to induce them to extend their stay.
July and August are the peak season for domestic tourism, and the ministry’s subsidies this year caused the number of tourists to surge. The overcrowding of popular tourist spots affected the quality of national transport, local traffic and site cleanliness.
As large amounts were spent during the peak season, the ministry no longer has funds to spend during the off-season, when subsidies are most needed. Budget allocations must be reviewed.
As funding is needed for airport facilities, the service fee should once again go to airports. If funds are needed for tourism, the ministry should consider implementing an international tourist tax, like Japan.
The increase to the airport service fee should go toward what was intended in 2015 — new Taoyuan airport facilities — easing taxpayers’ burden.
Wayne Chou is a former director of what was then the Chiang Kai-shek International Airport.
Translated by Eddy Chang
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