Intergenerational Foundation report shows the double injustice to future generations from not fully taxing air travel

The Intergenerational Foundation (IF) has been established to promote fairness between generations. They believe that each generation should pay its own way, which is not happening at present either financially or in terms of climate.  A new report on aviation shows that aviation is subsidised, through not paying either VAT or fuel duty, and that this amounts to an annual subsidy of some £11 billion per year. This is money lost to the public purse, which could contribute towards funding public services. This means that there is a double injustice to future generations.  Under-taxing aviation not only adds to the national debt which future taxpayers will have to fund, but also encourages more flying and greenhouse gas emissions which future generations will have to live with.  Future generations will pay the price of the failure of this generation to control flying. It should be essential reading for all those involved in the debate about the future of aviation.

 


A Third of UK Aviation Emissions Caused by Government Subsidies

20 November 2012

(by the Intergenerational Foundation – IF)

UK Households are subsidising the aviation industry, and therefore accelerating climate change, to the tune of £11 billion a year (equivalent to £400 per household) according to new figures released today by the Intergenerational Foundation (www.if.org.uk).

While private cars pay the full fuel tax and VAT rate, aviation is exempt from fuel tax and zero-rated for VAT. This makes air flights cheaper — and that’s before the true cost of emissions are taken into account.

IF estimates that in 2011 forgone fuel duty was £10.4bn and forgone VAT on tickets approx.
£3.2billion. This totals more than five times the tax yield of £2.6bn from Air Passenger Duty,
resulting in a net subsidy of £11 bn.

The report, entitled Flying in the Face of Fairness: Intergenerational Inequities in the Taxation of Air Travel, discusses the fiscal treatment of the aviation sector and quantifies taxes paid and taxes foregone to arrive at the £11bn “subsidy” enjoyed by aviation at the cost of current and future generations.

“Reducing the subsidy would raise ticket prices and make people think twice about that city break,” comments Angus Hanton, IF co-founder. “On the positive side it would improve the UK’s ‘Tourism Deficit’ by encouraging more people to holiday in the UK and do away with the need to expand Heathrow or build in the Thames Estuary.”

Research suggests that business travel would be affected far less than leisure travel, undermining airline lobbyist arguments that increasing airport capacity is the only option.
The immediate removal of these subsidies would increase a return trip by air by an average of £100, [less for a European flight] reduce the amount of leisure flying by a third and have a dislocating economic effect.

However a gradual withdrawal could reduce future growth in flying and help the UK to go some way towards meeting its emissions target of 80% reductions by 2050, as required by the Climate Change Act 2008.

“Current aviation policy is a double injustice to future generations,” adds Simon Dresner, report coauthor and Research Fellow at the Policy Studies Institute.

“Under-taxing aviation not only adds to the national debt which future taxpayers will have to fund, but also encourages more flying and greenhouse gas emissions which future generations will have to live with.”

IF urges the government to stand firm against the powerful aviation lobby groups and protect other industry sectors from being landed with even higher decarbonisation targets to meet the requirements of the Climate Change Act 2008 because of excessive emissions from aviation.

“Properly designed aviation policies could help us to balance the needs of current generations with the environmental burden being passed on to future generations,” continues Hanton. “We urge the Coalition to accept the findings of this report in its consultation on its Draft Aviation Framework.”

John Stewart, Britainʼs most effective green activist and Chair of UECNA, the pan-European antiairport-expansion network, as well as HACAN and AirportWatch, who provided the Foreword to the report adds, “This ground-breaking report produces compelling evidence that future generations will pay the price of the failure of this generation to control flying. It should be essential reading for all those involved in the debate about the future of aviation.”

The report (39 pages) is at  http://www.if.org.uk/wp-content/uploads/2012/11/Aviation_Report_Intergenerational_Foundation_FINAL.pdf

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Notes for Editors:   [ information in square brackets has been added by AirportWatch to the original IF press release, in addition to the extensive and detailed references in the IF report itself ].

.The Intergenerational Foundation (IF) has been established to promote fairness between generations. We believe that each generation should pay its own way, which is not happening at present. British policy-makers have given undue advantages to the older generation at the expense of younger and future generations.  http://www.if.org.uk/

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• 470 million passengers are predicted to fly by 2050 as opposed to 211 million passengers in 2010 based on conservative estimates, UK Aviation Forecasts, Department of Transport, August 2011.  [ https://www.gov.uk/government/publications/uk-aviation-forecasts-2011 ]

• £2.6bn Air Passenger Duty (APD) figures comes from Air Passenger Bulletin (HMRC, April 2012)   https://www.uktradeinfo.com/Statistics/Pages/TaxAndDutybulletins.aspx   and past editions

• The £11 billion subsidy to aviation could fund GP services (£7.7bn) or fund rail infrastructure.  [ Cost of the NHS per year in 2011/12 was around £106 billion. http://www.nhs.uk/NHSEngland/thenhs/about/Pages/overview.aspx ]

• The EU Emissions Trading System (EU ETS) is likely to result in windfall gains for the aviation industry.   [ For example  http://www.eaem.co.uk/news/exposed-airlines-make-windfall-profits-eu-ets ]

• Aviation receives 85% of its EU Emissions Trading Scheme CO2 allowance credits for free. [Details at http://www.airportwatch.org.uk/?page_id=8234 ]

• The UK is committed to emitting no more than 159 million tonnes of CO2 equivalent (MtCO2e) by 2050 to meet the Climate Change Act 2008.  [ Details at Briefing on inclusion of international aviation and shipping  – November 2012 ],

• Aviation accounts for around 13 % of the UK’s total climate impact. This figure takes into account greenhouse gases other than CO2, which have a warming effect when emitted into the atmosphere at altitude, using data from DECC 2010.  [ Gillian Merron’s reply in the House of Commons  2.5.2007.   6.3% given in that answer.   See also http://www.airportwatch.org.uk/?p=7932  indicating that UK aviation emissions were 6.4% in 2010, and 6.9% in 2009.]

• Flying causes up to 10 times more climate change damage than taking the train, Greenpeace, 2012. [Depending on the mix of electricity used to power the train – little in France due to nuclear power].

Press release at    http://www.if.org.uk/wp-content/uploads/2012/11/aviation_press_rel_environmental_DEFIN.pdf
Angus Hanton and Simon Dresner are available for interview.

Link to report is here

Please contact Liz Emerson on 07971 228823 or email liz@if.org.uk

 

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The report states:

• The costs to other sectors in 2050 are likely to be underestimates, since emissions reductions become progressively more expensive as the required cuts become steeper (since the easy/cheap reduction measures are implemented first).

Aviation has significant non-CO2 impacts that approximately double its overall contribution to climate change (compared to the effects CO2 alone). Accounting for these  impacts without policies to limit growth world require emissions reductions in other sectors  that are probably not feasible. (section 3.3 of the report)