Aviation industry pressure on government to cut APD. Again.

The World Travel and Tourism Council (WTTC) has commissioned a report by Oxford Economics, to put pressure on the government, before the Budget on 21st March, to cut Air Passenger Duty (APD).  APD is the tax on air travel that the UK charges, because air travel pays no  VAT and pays no fuel duty. The level of APD is  very low for flights to destinations below 2,000 miles away (£13 per person per return trip), and £65 per person for destinations between 2,000 and 4,000 miles. The WTTC report makes out that huge numbers of UK jobs would be lost because of the tax and huge numbers of jobs ….. based on deviously contorted logic. And omitting inconvenient facts. The government is expected to collect £2.8 billion in extra tax from air travellers over the next 12 months.The Treasury appears unmoved, and has commented that “unlike some other European countries, the UK does not levy VAT on domestic flights and aviation fuel is not taxed. The aviation industry will also benefit from the cut in corporation tax.’




12.3.2012

Below are some of the whingeing articles about this self-serving and self-interested campaign by the airlines to get the Treasury to cut APD ….  and keep cheap flights cheap.

It is all very one sided ……. ignoring the damage that cheap flights do to the UK economy and UK jobs in sectors other than aviation.  And the need for their industry to pay their fair share in tax, like other sectors.

To see the arguments in favour of keeping, and even increasing APD, see also

Under-taxed Aviation Industry wants to pay even less tax! It wants APD removed!

The WTTC report appears to be a 14 page PowerPoint presentation, with no detail.  It is at WTTC report on APD March 2012


 

Airlines highlight soaring levels of flight tax

Victoria Weldon  Reporter (Herald)
12.3.2012

SCOTS families are paying £300 more on average to fly between Scotland and England compared to 2005 due to soaring taxes, airlines have claimed.

Four people travelling between the countries three times a year would have an airport passenger duty (APD) bill of £420, compared to a figure of just £120 seven years ago, the parent firm of easyJet, Ryanair, Virgin Atlantic and British Airways has said.

The operators have joined forces to campaign against UK Government plans to increase APD on April 1, with further plans to grow the tax by 46% by 2016.

They claim it would mean a family flying economy class to the Caribbean would pay £440 in taxes, compared to £80 in 2005.

A joint statement from the CEOs of the firms claims the increase would be “job-destroying”.

The statement read: “These endless cumulative increases in APD are pricing families out of flying – both from and to the UK.

“That means fewer visitors to the UK, which destroys jobs in our tourism, aviation and hospitality industries, and chokes off opportunities for young people at a time of exceptional youth unemployment.”

A Treasury spokesman said: “The majority of passengers will only pay an extra £1 as a result of the rise. Unlike some other European countries, the UK does not levy VAT on domestic flights, and aviation fuel is not taxed.

“The aviation industry will also benefit from the cut in corporation tax.”

http://www.heraldscotland.com/news/transport/airlines-highlight-soaring-levels-of-flight-tax.16986172

 


 

Scrapping Air Passenger Duty would ‘boost Britain’s economy by £4.2 billion’

By TRAVELMAIL REPORTER

12 March 2012 (Daily Mail)

The government is today urged to scrap Air Passenger Duty (APD) – after a new report claimed that abolishing the tax would create 91,000 jobs and boost the UK economy by £4.2 billion in the next 12 months.

British travellers are facing yet another hike in APD from April 1, when the tax is due to rise by eight per cent.

The WTTC calls APD a ‘disproportionate tax on people’s holidays’. A family of four will pay an extra £368 to fly to Australia from next month

The increase means that a family of four flying to southern Spain will pay an extra £52 for their tickets. The same family will pay £260 more to fly to Florida and £368 more to fly to Australia.

The government is expected to collect £2.8 billion in extra tax from air travellers over the next 12 months.

But the World Travel & Tourism Council (WTTC) says that abolishing the tax would increase passenger numbers – which, in turn, would boost employment and the economy.

Its report, which was prepared by forecasting consultancy Oxford Economics, claims this would generate an extra £4.2 billion for the economy.

WTTC president and chief executive David Scowsill says that APD is a ‘disproportionate tax on people’s holidays’ and is ‘hitting business travel hard’.

He says: ‘When the economy needs help, it is economically illogical to continue with a tax that costs the country some 91,000 jobs and as much as £4.2 billion.

‘This tax is damaging the economy at a crucial time, and is having a negative effect on trade with countries in the Caribbean, Africa and Asia.

‘We urge the UK government to recognise the impact on the overall economy and reduce APD.’

The chief executives of four airlines – easyJet, British Airways’ parent company IAG, Ryanair and Virgin Atlantic – have also called for action to reduce APD, claiming that the tax is damaging the UK’s tourist industry.

Chancellor George Osborne announced the APD rise in autumn last year

The respective bosses – Carolyn McCall, Willie Walsh, Michael O’Leary and Steve Ridgway – say: ‘These endless cumulative increases in APD are pricing families out of flying – both from and to the UK.

‘That means fewer visitors to the UK, which destroys jobs in our tourism, aviation and hospitality industries and chokes off opportunities for young people at a time of exceptional youth unemployment.’

The airlines say that UK passenger numbers in 2011 are at the same level as in 2004, and blame APD for a lack of growth in the industry.

They say: ‘Aviation wants to, and should be, playing a leading role in economic recovery – as it does in so many other countries.

‘But the UK imposes the highest aviation taxes in the world, and keeps on increasing them without any analysis whatever of their overall economic impact.

‘We are exporting economic growth, and jobs, to competitor countries. How much longer must this madness go on?

‘We call on the Chancellor to suspend the April 1 rises in APD, and those planned up to 2016, while the Treasury commissions an independent study of the economic effects of this job-destroying tax.

‘We are confident such a study would show that APD’s damage to economic activity outweighs the revenue obtained. It is irresponsible of the Treasury, if it is serious about pursuing economic growth, to keep piling on APD increases without conducting a study of this kind.’

The Treasury has responded by saying that the government had taken action by freezing APD last year and had always been clear that the tax would increase this April.

A Treasury spokesman says: ‘The majority of passengers will only pay an extra £1 as a result of the rise. As announced at the Autumn Statement, we are also extending APD to private business jets for the first time.

‘It is also worth noting that, unlike some other European countries, the UK does not levy VAT on domestic flights and aviation fuel is not taxed. The aviation industry will also benefit from the cut in corporation tax.’
Read more: http://www.dailymail.co.uk/travel/article-2113822/Air-Passenger-Duty-rise-Scrapping-tax-boost-Britains-economy-4-2-billion.html#ixzz1oujOH5Ku

 


 

“£2.8 billion air stealth tax is doing more harm than good”

[Earlier title was “Air tax: doing substantial damage to the UK economy”]

 

12.3.2012

( Press release from The World Travel & Tourism Council )

The UK’s controversial air tax costs 91,000 jobs and is acting as a brake on the economy.

New research by the World Travel & Tourism Council (WTTC) shows that removing Air Passenger Duty would result in an additional 91,000 British jobs being created and £4.2 billion added to the economy in 12 months.

The research comes as Britain is about to face yet another rise in Air Passenger Duty. Increases planned from April mean a family of four flying to Malaga will pay £52 extra on the price of their tickets. [That means just £13 each person, and the WTTC has to multiply it by 4 to make it look like a noteworthy number !].  This rises to £260 for the same family to fly to Florida [i.e. £65 per person] and £368 to fly to Australia. [The fares contain no VAT and no fuel duty. The amount of fuel used on a trip to Florida or Australia is huge. The cost of the rest of a holiday for a family of four will be several thousand ££s minimum. See below . The APD component is likely to be tiny, in relation to total cost].

David Scowsill, WTTC President & CEO, said “Air Passenger Duty is a completely disproportionate tax on people’s holidays and is hitting business travel hard. When the economy needs help, it is economically illogical to continue with a tax that costs the country some 91,000 jobs and as much as £4.2 billion.”

In the next 12 months, the UK Government will collect £2.8 billion in extra tax from air travellers, far more than any other country in the world.

David continued: “Travel & Tourism grew by 4.1% in the UK last year, but is forecast to slow to 1.3% in 2012. This slowdown is partly due to the impact of Air Passenger Duty, which is dampening demand.

This tax is damaging the economy at a crucial time, and is having a negative effect on trade with countries in the Caribbean, Africa and Asia. We urge the UK Government to recognise the impact on the overall economy and reduce Air Passenger Duty.”

Martin Craigs, CEO of the Pacific Asia Travel Association (PATA), said: “The UK is an island trading nation, air services are the vital lifeblood of modern global commerce. The UK Air Passenger Duty is now the world’s highest by a wide margin. It is certainly turning away tourism and trade from the world’s fastest growing economic region Asia Pacific.

Airport Passenger Duty started in1994 at £5 and some worthy intentions to offset aviations carbon footprint. Today at £85 to zone D (Asia/Pacific) it’s a ‘detention tax’ that’s restricting job growth, alienating important trade partners and not being transparently directed to green projects. Airport Passenger Duty maybe easy to collect but it’s also easy to see its macroeconomic damage.”

ENDS

Note on the research:

The research was conducted by Oxford Economics for the World Travel & Tourism Council. The research examined how sensitive passengers are to changes in fares, based on statistics from the Department for Transport and Intervistas. DFT estimates show a lower sensitivity than estimates by Intervistas.

Oxford Economics concluded that:

  • Abolishing Airport Passenger Duty would raise the UK “gross value added” by between £1.8 billion and £2.9 billion in 2012 due to the boost to aviation and tourism sectors from increased passenger numbers This would create an extra 38,000 to 61,000 jobs.  [How about the reduction in jobs, caused by all those travellers from UK going abroad and spending their money abroad instead of UK?  Larger numbers of Brits travel abroad than foreigners come to the UK.]
  • The extra income available for consumers from lower airline ticket prices provides a stimulus to consumer spending, and could raise the UK “gross value added” by £1.3 billion and 30,000 jobs.  [sic !!  They could boost the UK economy even more if they did not spend so much on taking cheap flights to trips abroad] 
  • The overall benefit to the UK economy could be up to 91,000 jobs and £4.2 billion
Note to Editors:
The World Travel & Tourism Council is the global authority on the economic and social contribution of Travel & Tourism. It promotes sustainable growth for the industry, working with governments and international institutions to create jobs, to drive exports and to generate prosperity.
In 2011 Travel & Tourism accounted for 255 million jobs globally. At US$6.3 trillion (9.1% of GDP) the sector is a key driver for investment and economic growth. For more than 20 years, the World Travel & Tourism Council has been the voice of this industry globally. Members are the Chairs, Presidents and Chief Executives of the world’s leading, private sector Travel & Tourism businesses. These Members bring specialist knowledge to guide government policy and decision-making, raising awareness of the importance of the industry as an economic generator of prosperity.
www.WTTC.org
WTTC Media Relations Manager:
WTTC report on APD March 2012

Under-taxed Aviation Industry wants to pay even less tax! It wants APD removed!

11.3.2012

A report due out tomorrow will claim that Air Passenger Duty (APD) is hurting the economy. But  it fails to address the reason for the tax. The report from Oxford Economics, and commissioned by the World Travel & Tourism Council (WTTC), will claim that removing APD would result in an additional 91,000 British jobs being created and £4.2 billion added to the economy in 12 months. AirportWatch Chair John Stewart condemned the report “as a little more than a self-interested attempt by the aviation industry to pay its full share of taxation. It pays no tax on it fuel and is zero-rated for VAT”. The aviation industry is actually under taxed. Not over taxed. In 2010/2011 the exemption from fuel tax and VAT was worth more than £11 billion to the airlines. After deducting APD revenues of around £2.5 billion in 2012 after the rise this coming April, the net benefit is around £8.5 billion – equivalent to a subsidy to the airlines of about £360 per household. John Stewart said: “The Government has rightly ignored the special pleading of the aviation industry to pay even less tax. There is no indication that this latest report from the industry’s favourite consultant will change the Government’s mind.”

http://www.airportwatch.org.uk/?p=1495

Cost of a holiday.

How much is APD as a proportion of someone’s holiday?

Presuming someone who travels to Florida or Australia for their trip is going to stay for two weeks:

What might the costs of the holiday be?

Low estimate:  One person – £50 per night accommodation.  Plus £20 other costs (food, drink, trips, entertainment, car hire, shopping etc)  = £70 per day.
For a two week holiday 70 x 14 = £980

The APD at £65 is 6.6% of the total cost.

 

The cost could easily be double that. Or more.

Medium estimate:  

One person – £60 per night accommodation.  Plus £30 other costs per day = £90

Let’s say £90 per person per day for 2 weeks. = 14 x £90 = £1,260

And then the cost of the air fares on top. Say £500 each person. That’s £1,760 for one person.

The APD per person is £65 to Florida.

The APD at £65 is 3.7% of the total cost. 

 

A family of four = 4 x £1,760 = £7,040

The APD for a family of 4 is £260. As a proportion of £7,040 is 3.7% of the total.

If the family can afford the £7,000 holiday, the extra £260 is not going to make a great deal of difference. Especially as the air travel is artificially cheap, paying no VAT and not fuel duty.

If they were to take their car and drive to their destination (in Europe, realistically) they would be paying a great deal in VAT and petrol duty in order to do so. For a shorter distance.