February 5, 2012

What's the Honduran government's cut of your travel costs?

Often we have vague discussions about Honduras and I am compelled to see just what exactly the law or constitution say on the matter. It is frequently very difficult to find a law unless you know the name or number of the law, and when you find it, it's hard to know if a later law may have revised or eliminated it. But I like detective work, so I usually persevere. ;-)

The following events set me on the detective trail:

A law was passed in December 2011 to increase the airport departure tax from around US $34 to around US $60 to generate money for InterAirports to build the new Palmerola airport. The increase in exit fee was not discussed or made public, and only came to light later amidst a ton of bad publicity prompting congressional claims that they didn't http://www.blogger.com/img/blank.gifknow what was in the contract that they had approved. Ultimately, due to the possible affect on tourism as well as business travel, President Lobo vetoed the decree.

Then in January, the media discovered that yet another increase to the airport taxes had been passed by congress on that very same day. This one was an increase of US $34, or a charge of US $17 on arrival and US $17 on departure for all international travelers. Again it related to a contract, the Securiport contract to provide better immigration control of visitors. Again, the congress claimed to not know that they were approving an increase in taxes. And again, even though President Lobo personally had ordered the contract specifically with Securiport under an "emergency" decree (no public bidding process), he vetoed the decree due to the bad publicity and outrage by congressmen saying that they had been tricked.

This second tax, combined with the other law, would have made the total Honduran "entrance/exit" fees charged to travelers US $94, approximately three to four times that charged by other Central American countries. And that's not even considering the hefty 12% sales tax, 15% liquor tax, and 16% hotel tax that travelers already pay while in Honduras.

Discussion of those new taxes led to comments from travelers like "Honduras already has the highest airport taxes" or "I already pay US $250 in Honduran taxes plus the $34 exit fee", and "We already pay a lot more for a round trip from Honduras than others pay for a round trip to Honduras!" That piqued my curiosity. Was it true that Honduran taxes on air travel were already high even without these new laws?

I couldn't find any law on transportation taxes, so, curious to find out exactly what taxes were charged on airline tickets, I asked people to send me copies of their online ticket confirmations to see what I could figure out. With the initial batches of tickets that I received, it appeared that this wasn't really a "Honduran transportation tax" as it was described on the ticket fare breakdowns, but a sales tax of 12%, the base Honduran sales tax rate. All of the initial breakdowns that people sent me included a tax of 12% of the base fare of the ticket when the originating flight left from Honduras, and no Honduran tax if the flight originated in another country. I thought I had it figured out.

Then a couple of people threw a kink into my theory after sending me ticket cost breakdowns that reflected a 15%, 16%, or 18% Honduran transportation tax. Still unable to find anything definitive, I reluctantly put it aside as one of those Honduran mysteries that I couldn't solve.

Today while looking for another obscure law (which I couldn't find either!), I ran across the Sales Tax Law and decided to see if it said anything specifically about airline tickets. Ahah! The law says that national or international airline tickets, including those emitted by internet or other electronic means, are charged the 12% sales tax, depending on where the orders or tickets (electronic or not) are emitted or in the place that the passenger will board. All of the 20 or so tickets that I initially reviewed were taxed at 12% if the flight originated in Honduras. If the flight originated in another country, no Honduran sales tax was charged.

The tax is charged on the entire base fare plus fuel charges, if any, even if future legs of the journey originate from and arrive in other countries. For example, one itinerary originated in San Pedro and included a trip from Newark to Hong Kong. The entire base ticket price was taxed at 12% by the Honduran government! If you want to save money on a multi-leg journey, you might want to check into booking your later non-Honduran flights separately. The US charges a boatload of taxes on airline tickets, but the total doesn't come close to approaching 12% of the base fare except on lower dollar tickets (under $500 or so).

So the first part of my theory was correct. But what about the tickets which reflected higher tax rates?

Assuming that there was a more recent law, I googled again using "impuesto transporte aéreo honduras" and found several newspaper articles. In March 2010, as a part of Lobo's first tax paquetazo, the sales tax on first class, executive class, and business class tickets was increased to 18%.

Based on the tickets that several Honduran residents sent to me, I was able to determine that only the first class (or similar upgraded) portion of the ticket is charged 18% sales tax so that is why I saw "Honduran transportation tax" being charged at various percentages of the base fare, ranging from 12% to 16% to 17% or 18%. The odd rates were when the traveler flew regular class in one direction and first class the other. If the entire ticket was first class, tax of 18% was included.

So now you know exactly what taxes you are being charged by the Honduran government. They are going to get 12% of your airfare (18% if you fly first class), 16% on your hotel costs, 15% on liquor costs, and 12% on restaurants and just about any other purchases you make ... at least until the next sneaky law is passed in the middle of the night. Yes, the Honduran government would definitely profit from working on promoting tourism more than they do!

P.S. Thanks so much to all of you who sent me your ticket breakdowns. This question was driving me crazy!
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