Air Passenger Duty (APD) should be scrapped on all flights to and from Northern Ireland, a group of MPs has said.
The £13 tax on short haul routes comprising the majority of services to the region is a major stumbling block to boosting business and rebalancing the economy, the select committee report added. It said there are no realistic alternatives to air travel into and out of Northern Ireland.
The inquiry also called for a UK and Irish joint visit visa and said the cost of two permits was deterring travellers from visiting both jurisdictions on a single visit.
The report said: "We recognise the pressures on HM Treasury but, assuming that APD is not abolished for the whole of the UK, there is only one solution: we therefore recommend that HM Treasury and the Northern Ireland Executive explore ways to reduce or, preferably, abolish APD on all flights into Northern Ireland from Great Britain and, crucially, on all direct flights from Northern Ireland to any destination.
"In that way, Northern Ireland's business, enterprise and tourist industry stand a much improved chance of being able to compete with the Republic of Ireland, where Air Travel Tax, the equivalent of APD, is just three euro."
The Northern Ireland Affairs Committee said links from Northern Ireland to central hub airports like Heathrow must at least be maintained at the current level, with Heathrow slots ringfenced and further routes sought. Road and rail links to the three Northern Ireland airports should be improved.
Laurence Robertson, chairman of the committee, said: "To help rebalance the Northern Ireland economy, it is vital that air links to Great Britain, mainland Europe and the rest of the world are robust.
"That means making sure key routes and landing slots are protected and that people who have no real alternatives to flying, for business or their family lives, are not unfairly penalised by the taxes imposed on air travel."
Duty on direct long haul flights departing from Northern Ireland airports will be reduced to zero from January. It follows a lobbying campaign by the airline running a service from Belfast to Newark which faces competition from lower tax routes from Dublin.
The head of the International Airlines Group, Willie Walsh, recently said there is no chance of the £13 tax being scrapped. Stormont Finance Minister Sammy Wilson has said he would like the duty cut, but warned it might cost Northern Ireland too much in money lost from the block grant from the Treasury to run public services.
The committee today said the Government should expedite a review by the Airports Commission into options to maintain the UK's status as an international aviation hub, given its importance to Northern Ireland.
The Commission is not due to report until 2015 and delay as to the future airport configuration and capacity in the south east of England is causing concern among members of Northern Ireland's business community.
Today's report said the UK and Irish governments were cooperating to try and introduce a common visit visa, the main problem being that Irish embassies did not have the technology necessary to take biometric data from applicants.
"This (visa) would clearly be of benefit to those visitors and investors to the Republic who wished to visit Northern Ireland for tourism - for example the Giant's Causeway or Titanic Belfast or to spend a couple of days in Londonderry - and business opportunities, with potential benefits to the wider economy.
"Equally, it would be of benefit to visitors to Belfast who wanted to take a day trip to, for example, the Boyne Valley or the Guinness Storehouse in Dublin."