Osborne postpones action on Air Passenger Duty or per plane tax till the autumn

23.6.2010 (ABTN)

by Stanley Slaughter

The UK government today (June 22) postponed any decision on the controversial
Airport Passenger Duty (APD)

George Osborne, the Chancellor of the Exchequer, said in his emergency budget
that he would report back in the autumn on whether to scrap the tax and replace
it with a per plane duty.

Much of the UK travel industry has called for the tax to be scrapped. These include
airlines and travel agents.

Earlier this month the travel agents’ association ABTA, called on the industry
to “barrage” MPs over their concerns about the tax.

The Conservative-Lib Dem coalition government had also not yet made clear whether
the planned increase in APD, due on November, will go ahead.

APD, which was also increased last November, is due to rise then by £1 per passenger
on short haul flights, £12 on medium haul and between £25 and £30 on long haul

The per plane duty taxes the plane rather than the passengers which critics said
is both fairer and more environmentally friendly.

However it is likely that any per plane tax will be passed on by airlines to



George Osborne said:   “The government will report back in the autumn on its proposal to impose a per
plane tax as opposed to a per passenger tax to contribute towards a reduction
in carbon emissions.”


see also


Budget: “cost of air travel set to rise because of increased aviation taxes”

23.6.2010   (Telegraph   – warning – very biased article !)

Families face further increases in the cost of flying with the Government looking
to double the amount it raises from aviation taxes.

by David Millward, Transport Editor

Already facing a sharp rise in Air Passenger Duty in November, the small print of the Budget shows that more increases are likely with the Treasury planning to raise £3.8
billion in 2014-15 from air travel, compared to £1.9 billion last year.

It is expected to add hundreds of pounds more to the cost of a family holiday,
despite the Chancellor’s announcement that the Government is considering a switch
from a per passenger to a per plane duty.  

The prospect of further rises horrified both consumer groups while the aviation
industry said families were facing a "hidden tax bombshell".

Already rises in Air Passenger Duty due to come into force in November will mean
a family of four flying to Florida will pay £300 in taxes alone – compared to
£200 at the moment.

This higher rate of APD will, according to the Treasury’s own figures, rake in
£2.9 billion next year.
This will increase by nearly a third within only three years.

"We fear that there is a secret aviation tax bombshell hidden in the figures
and any family looking to fly on holiday will have to pay the price," said Michelle di Leo, spokesman for the aviation lobby group, Flying Matters.

"Our fear is that any restructuring will be seen as an opportunity to take even
more tax from people who fly.

"The rises planned in November are already eye watering, (!) the small print in the document suggests there is even worse to come."

Similar misgivings were voiced by Simon Evans, chief executive of the Air Transport Users Council.

"We accept a polluter must pay, and the reality is in straitened times we all
have to pay our fair share," he said "

But a 33% increase in what air passengers contribute to the Treasury does seem
over the odds."

Some airlines, notably BA, also voiced misgivings about proposals for a per plane
tax, especially given the Liberal Democrats manifesto pledge to raise £5.3 billion
from the reformed duty.

"We continue to believe such a tax would significantly damage Britain’s economic
competitiveness without bringing any practical environmental benefit," a BA spokesman

"A per-plane tax would be particularly bad news for air passengers in the UK
regions and would also be likely to reduce the range of longhaul destinations
served directly from the UK’s national hub airport, Heathrow."

All three parties support taxes on air travel saying they are essential to ensure
Britain meets its carbon reduction targets.

However environmental groups were dismissive of the Coalition’s first budget
which, they said, failed to live up to its claims to be the greenest Government

“We need to build a green economy to guarantee a safe and prosperous UK – but
the Chancellor has failed to take the bold decisions we so urgently need," said
Simon Bullock, Friends of the Earth’s economy campaigner.

“Increasing VAT is deeply regressive – Robin Hood taxes on banking transactions
and increased taxes on aviation pollution would have been a greener and fairer
way to cut the deficit."



The budget doc (table page 100)    shows take from APD rising from £1.9bn to £3.8bn
in 2015/16

Budget 2010: key points 



Aviation is heavily subsidised, to the extent that it pays not VAT on tickets,
and there is no tax on aviation fuel.   A litre of aviation fuel costs around 30
– 33p, while a litre of petrol for the car costs around £1.19. Aviation is a sector
that is very lightly taxed indeed.       The benefit to the UK aviation industry
of not paying these taxes is worth at least £9 billion a year.   When VAT rises,
the benefit will be even greater.   And
it’s not just aircraft: spare parts, servicing: if it flies and it isn’t a bird,
it’s VAT-free.   Even the in-flight meals and  the in-flight scratch cards..






Comment from an AirportWatch member:

Yet again this budget is a case of “We’ll deal with the aviation industry ‘tomorrow'”!
[When they had the perfect opportunity to start ‘today’]

Surely, at some point we must start a campaign to point out that we are not prepared
to save 90+% of our carbon emissions across all sectors of society, in order to
allow aviation to continue to expand ?   And how can the aviation industry buy
offsets for their expanding emissions,  when they have already put everyone else’s
savings up to 90+%? Where does that extra carbon come from?

I was exceptionally disappointed by yesterday’s budget, which was, to my mind,
a budget belonging to the "late second millennium" and NOT to today’s world.    
About the only time "green" was mentioned was in connection with banks.     We need
to be thinking very differently, and looking at a new model.   For example, in
order to get passengers out of Domestic Flights, we are looking at High Speed
Rail as an alternative. Unfortunately, as published by some researchers, when
we create those High Speed Rail lines MORE people will travel.  Hence the SAVINGS
in our carbon budget made by getting passengers out of Domestic Flights will be
LOST simply because more people will travel and we will run more trains – thereby
uplifting the carbon emissions.

our transport – and overall – emissions DOWN … and what’s more KEEP THEM DOWN.

There are  figures around like £30Bn to build a High Speed Line from London to
Birmingham (and perhaps Leeds/ Manchester). That’s a lot of money.

Now let me return to my comment above that the budget was a "late second millennium
budget". We need to REMOVE money from projects like £30Bn rail lines and MOVE
that money into creating "third millennium" GREEN industries. Industries that
will take this country into the realms of SAVING emissions, and also give this
country a platform to EXPORT such industries and products to fully underpin the
fiscal strength the Chancellor is looking for – not just NOW – but in the FUTURE

During my formative years – post WW2 – I actually lived in a time of austerity.
My parents had "nothing".   We had our holidays within 50 miles or so of home.  
100 miles at the most and we weren’t in the least bit "unhappy" about that.

The "current" generation of 25-40 year olds actually grew up in a time of "financial
security" AND easily available "world travel". Consequently, they "think" that
"this is life". As they have never experienced anything else, "austerity" is something
they will fear. I see that the Chancellor is 39 years old – he, himself, has lived
in that world.

WE MUST get beyond these thoughts and return to "real austerity" and living happily
by "real values" – not false ones built up by the "freedom to travel at the drop
of a hat".   If we don’t go at least "part of the way backwards" then we will NEVER
conquer our carbon emissions.   But how to achieve that is the issue.

We DESPERATELY need a "Budget for the third millennium" … but I don’t think our
parliament contains members who know how to achieve this. Indeed they are supporting
"late second millennium big business" and are largely in denial of the environment.