Levy on frequent leisure flyers proposed to make airport expansion unnecessary
Plans for a “frequent flyer” tax to curb demand for leisure flights and make a new runway in south-east England unnecessary have been unveiled by an influential group of transport campaigners, environmentalists and tax experts. These include the Campaign for Better Transport, the New Economics Foundation, the Tax Justice Network, Greenpeace and Friends of the Earth among others. In a letter to the Observer – in order to remove the alleged “need” for a new south east runway – they put forward the concept of allowing each person one tax-free flight per year, but increasing the rate of tax for people who fly frequently. The levy would rise with each successive flight. This would mean that instead of APD (£13 per return flight to Europe) there would be a higher rate of tax for frequent fliers. Their analysis shows that 15% of the UK population take 70% of all the flights, while half of us don’t fly at all in any given year. Rather than a new runway being vital for business, the reality is that it would be used for the better off to take more leisure flights (holidays or visiting friends and family). The proposed levy would mean the number of flights would be cut to a level that would make a new runway unnecessary. The authors of the scheme have also shown that this change to the taxation of air travel would also ensure the UK could comply with its obligations under the Climate Change Act.
Levy on frequent leisure flyers proposed to make airport expansion unnecessary
Proposed tax would only hit better-off who holiday more than once a year
By Toby Helm Political editor
Saturday 20 June 2015
Plans for a “frequent flyer” tax to curb demand for leisure flights and make a new runway in south-east England unnecessary have been unveiled by an influential group of transport campaigners, environmentalists and tax experts.
Ministers, and candidates seeking to be the next mayor of London, including Tory hopeful and green campaigner Zac Goldsmith, are being urged to back the proposals, which supporters argue in a letter to the Observer would relieve ministers at a stroke from having to make the invidious choice between expanding Heathrow or Gatwick airports.
Sir Howard Davies, former leader of the CBI and head of the Airports Commission, will report within a fortnight on how he thinks capacity can best be expanded in the south-east. He is expected to make a recommendation to develop either Heathrow or Gatwick, but may insist on tough environmental conditions being met by the “winner”. These could allow ministers room to judge which option they believe would achieve the best balance between the economic benefits and environmental impact.
The decision is one of the most controversial and politically difficult facing the new Tory government. Expansion of Heathrow is being resisted by several Tory cabinet ministers – including international development secretary Justine Greening and foreign secretary Philip Hammond –whose constituencies would be affected, as well as by London mayor Boris Johnson. A group of Tory MPs is also campaigning against an expansion of Gatwick.
With debate intensifying, green campaigners, transport groups, economists and tax experts have joined to propose the radical plan, which they say would reduce costs for once-a-year holiday travellers, while hitting those who choose to fly regularly. They say it would also ensure the UK could comply with its obligations under the Climate Change Act.
Under the plan, backed by the Campaign for Better Transport, the New Economics Foundation, the Tax Justice Network, Greenpeace and Friends of the Earth among others, air passenger duty would be scrapped and replaced by a new frequent flyers levy. Everyone would be able to take one flight a year without paying any levy, but for subsequent journeys the levy would rise each time.
Using accepted methods to calculate the effect of price on demand, experts say the number of flights taken by the better-off for leisure purposes – which account for much of recent growth – would be cut to a level that would make extra airport capacity unnecessary.
In their letter they say: “Britain’s skies are already some of the busiest in the world, and Howard Davies knows that these expansion plans cannot be made to fit with the UK’s long-term commitments under the Climate Change Act. Contrary to aviation lobby rhetoric, a new runway is not needed to allow more international business flights, which have been declining steadily since the turn of the century.
“The hub airport argument is a smokescreen. In reality, growing demand for air travel is concentrated in the short-haul leisure sector and among a small, wealthy minority of the population. It is more of these flights that a new runway will in practice service.
“This growth in flights is driven by air fares that are kept artificially low through generous tax subsidies; aviation is exempt from fuel duty by international treaty and zero rated for VAT, alongside wheelchairs and baby clothes. Yet these tax breaks almost exclusively benefit the richest section of British society. Our analysis of passenger survey data shows that 15% of the UK population are taking 70% of all our flights, while half of us don’t fly at all in any given year.”
They argue the new levy would shift the burden “away from families flying to their annual holiday and on to the frequent fliers who are driving expansion. Our research shows that this would let the UK meet our climate targets without making flying the preserve of the rich – and without needing to build any new runways.”
Stephen Joseph, director of the Campaign for Better Transport, said: “Replacing air passenger duty with a frequent flyers levy could, on the evidence so far, make it unnecessary to build any new runways. As the politics of airport expansion get more difficult, we think the government should look seriously at the levy proposal, to ensure that the richest who take the most flights pay the most tax.”
John Stewart, chair of Heathrow Association for the Control of Aircraft Noise, (HACAN) which campaigns against expansion of Heathrow, added: “The beauty of this proposal is that it ticks both the equity and green boxes. It is a way of controlling the growth of aviation but still allowing ordinary families a holiday in the sun.”
With business leaders impatient for a decision, the government has said it will not comment on airport expansion until Davies has reported. Sources have indicated that a decision on which option to back is unlikely until the end of the year. Some government insiders believe it will then be difficult to back expansion of Heathrow in the run-up to the mayoral elections next May.
Comment by an AirportWatch member:
This novel way to think about the taxation of air travel (which is exempt from VAT and fuel duty) has been widely welcomed as clever and innovate way to open up the debate, and explore the issue of the cost of air travel – and who is flying. This helps move the debate on – rather than just the sterile and repetitive war of words and claims between the Heathrow and the Gatwick runway schemes. The issue if very much IF a runway should be built, not just about WHERE to put it. This new proposal gets straight to the heart of the problem – tacking the “elephant in the room” of leisure flights by the better off being too cheap.
The letter in the Observer
It’s not about where we put a runway. Don’t build one at all
Introduce a polluters’ tax on frequent flyers
Any moment now, the Airports Commission will finally publish its recommendation for new runway capacity at either Heathrow or Gatwick. What will be missing from this report is a third option that would be preferred by many: no new runway at either airport.
Britain’s skies are already some of the busiest in the world and Howard Davies knows that these expansion plans cannot be made to fit with the UK’s long-term commitments under the Climate Change Act. Contrary to aviation lobby rhetoric, a new runway is not needed to allow more international business flights, which have been declining steadily since the turn of the century. The hub airport argument is a smokescreen. In reality, growing demand for air travel is concentrated in the short-haul leisure sector and among a small, wealthy minority of the population. It is more of these flights that a new runway will in practice service.
This growth in flights is driven by air fares that are kept artificially low through generous tax subsidies; aviation is exempt from fuel duty by international treaty and zero rated for VAT. Yet these tax breaks almost exclusively benefit the richest section of British society. Our analysis of passenger survey data shows that 15% of the UK population are taking 70% of all our flights. That’s why we are calling today to replace air passenger duty with a frequent flyer levy that taxes travellers according to how often they fly, shifting the burden away from families flying to their one annual holiday and on to the frequent flyers who are driving expansion. Our research shows that this “polluter pays” approach would enable the UK to meet our climate targets without making flying the preserve of the rich – and without needing to build any new runways.
John Stewart, HACAN;
Stewart Wallis, New Economics Foundation;
John Sauven, Greenpeace UK;
Joe Jenkins, Friends of the Earth;
Stephen Joseph, Campaign for Better Transport;
Manuel Cortes, TSSA Union;
Tahir Latif, PCS Union Aviation Group president;
John Christensen, Tax Justice Network;
Duncan Exley, Equality Trust;
Richard Murphy, Tax Research UK;
Ed Gillespie, London Sustainability commissioner and co-founder Futerra;
Andrew Simms, co-founder of the New Weather Institute & fellow of NEF;
Elena Blackmore, Public Interest Research Centre;
Jamie Andrews, Loco2;
Leo Murray, 10:10;
Richard Dixon, Friends of the Earth Scotland;
Colin Howden, Transform Scotland
FAQs from “A Free Ride”
Report for Fellow Travellers, by NEF (New Economics Foundation)
Managing aviation passenger demand with a Frequent Flyer Levy,
HACAN backs Frequent Flyers Levy to replace Air Passenger Duty as “both green and equitable”
Campaign group HACAN has given its backing to the plan for a Frequent Flyers Levy to replace Air Passengers Duty. The proposal, released this weekend (1) and based on reports from the New Economics Foundation and CE Delft, suggests that each person is given one tax-free flight a year (if they want to take it) but that the tax rises with every subsequent flight taken (2).
Just days before the Airports Commission is due to publish its recommendation on whether a new runway should be built at Heathrow or Gatwick, the New Economics Foundation report suggests that no new runways would be needed if a Frequent Flyers Levy was introduced. The growth in aviation would be curbed sufficiently to allow existing runways to cope with future demand.
The backers of the Frequent Flyers Levy argue that 85% of the British public would benefit from it: Last year:
- 52% of us took no flights
- Less than 15% of people took 3 or more flights
15% of people took 70% of flights. These are the people identified as the frequent flyers. Their defining characteristics are that they earn more than £115,000 a year and have a second home abroad. Most of them come from the City of London, Westminster, Kensington and Chelsea and Surrey. And their most popular destination is tax havens! These are predominately not business flights. Business travel by the UK population is declining. It is now just 12% of all flights. It is leisure travel, particularly by the frequent flyers, which has soared.
Work commissioned from the Public Interest Research Centre (PIRC) found that over 50% preferred the Frequent Flyers Levy to Air Passenger Duty
HACAN chair John Stewart said, “The beauty of this proposal is that it ticks both the equity and green boxes. It is a way of controlling the growth of aviation but still allowing ordinary families a holiday in the sun.”
Organisations backing the Frequent Flyers Levy include the Campaign for Better Transport the New Economics Foundation, the Tax Justice Network, Greenpeace and Friends of the Earth.
Notes for Editors:
(2). More information Frequent Flyers Levy Briefing or http://blog.afreeride.org/faqs/
Also article, and discussion, at Tax Research UK
By STEPHEN DEVLIN
(NEF – New Economics Foundation)
We all know that flying is bad for the environment and a major driver of climate change. What’s more, demand for flights is expected to more than double over the next few decades, making the problem even worse.
But what most of us don’t know is that the majority of flights are taken by a very small and very rich segment of the population. It’s estimated that 70% of the total number of flights are taken by only 15% of the population, while 57% of the population took no flights abroad whatsoever in 2013. Those who do fly are significantly wealthier – for example, the average income for leisure passengers at Edinburgh Airport in 2013 was more than twice the average Scottish income.
Why should we allow a small number of rich people to take advantage of a global environment that belongs to all of us? And why should we assist those flights with fuel duty and VAT exemptions, as we do in the UK? It stands in stark contrast to those in low-earning countries who stand to suffer the worst effects of a changing climate.
The fair solution is obvious: those that fly more should pay more.
The majority shouldn’t have to subsidise the air miles lifestyle of the elite. That’s why we’re joining forces with the Fellow Travellers campaign in proposing that the current system of Air Passenger Duty, which levies the same small charge regardless of how frequently we fly, should be replaced with a Frequent Flyer Levy. A move to this system would see nothing charged on the first return flight that an individual takes each year, but would see it increase progressively the more flights the individual takes.
By doing this we can help limit the environmental impact from flying in a way that is fair and doesn’t penalise the majority for the actions of an e elite. We can have a future in which flying is not reserved for the rich and we don’t have to keep building more runways for the benefit of the few. But to do that we need to correct the injustice in our tax system.
Our report, Managing aviation passenger demand with a Frequent Flyer Levy, forms part of the newly launched Fellow Travellers project. Together we are making the case for replacing the biased system of Air Passenger Duty with a fairer Frequent Flyer Levy. We show how this can both reduce the environmental impact of flying and redistribute flights away from the richest towards the rest of us.
There’s a way fairer way, so let’s make it happen.