Air Passenger Duty - The Latest

Air Passenger Duty

The UK has the highest APD in Europe (Air Passenger Duty – a tax on every passenger flying out of the UK). This rose significantly on the 1st of November 2010 despite the lessons learned from the Dutch, who in the past having raised air passenger duty suffered business loss to such an extent that they scrapped their APD altogether. In the latest Budget announcement (2012) the Chancellor increased the level of APD still further.

The UK government should abolish APD  entirely, according to senior Labour MEP Brian Simpson, chair of the European Parliament Transport Committee.

“Elsewhere in the EU, countries are removing counter-productive air passenger duties. The Dutch government recently lifted a similar tax and the newly-elected Irish government is committed to removing its duty. Holland and Ireland saw the adverse affect the tax is having on their national economies”, says Mr Simpson.

“By freezing it the Chancellor is admitting that the air passenger duty is a regressive tax. It is particularly hard-hitting for regional airports as the cost of APD acts as a disincentive to airlines flying direct long haul services to airports like Manchester and Liverpool”, adds Mr Simpson, who has long-campaigned for the abolition of the per passenger tax.

The APD falls into 4 bands A,B,C & D found here, (A being short flights under 2000 miles up to D being long flights over 6000 miles), and it is clear from the rises that flights over 2000 miles distance will be hit the hardest with premium Economy travellers suffering the most. The Government has planned the rise for several years using the excuse that the air travel industry should meet its environmental costs, which will now have families face 325% more duties than in 2006. Despite having reviewed the possibility of a PPD (Per Plane Duty) tax in the emergency budget meeting in June 2010 a much more logical, environmentally friendly and fair tax (the PPD remains to be seen, however), the Government has given no indication to just how the disproportionate amount of extra raised revenue from APD will go towards protecting the environment. The following is from ABTA (the Association of British Travel Agents) regarding the rise:

“ABTA has expressed great concern that the APD bands based on the distance from London to the capital city are illogical from an environmental perspective and would put off travellers to destinations such as the Caribbean and Kenya, whose economies are extremely dependent upon tourism as well as the popular VFR markets of Australia and New Zealand. ABTA has campaigned vigorously with its trade partners to have APD frozen at the November 2009 levels pending introduction of the ETS in 2012. ABTA believes the general public must not be disenfranchised by using economic instruments as a means of raising costs of aviation.

“Tax rises are socially regressive and will impact most upon those who can least afford it and lead to families being priced out of taking flights. This is especially acute for lower socio-economic groups and ethnic minorities visiting friends and relatives abroad. ABTA accepts that aviation should pay its proper environmental cost; however, that cost is reflected in the current APD level. ABTA notes with concern that the Government proposes continuing with an element of APD once aviation joins the ETS in 2012. We remain of the view that British travellers should not be penalised by a form of double taxation. ABTA welcomed the Government’s June 2010 announcement to examine aviation taxes but has highlighted concerns over the level of taxation.

“We believe that APD should be replaced with a Per Plane Duty (PPD) – a fair tax based on efficiency of aircraft and more closely aligned to the distance travelled. We support a small number of exemptions for military, diplomatic, emergency and lifeline services but believe the current exemption for corporate jets should be removed. We will continue to encourage scrapping this tax when aviation joins the EU ETS.”

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