AirportWatch says airlines must pay their fair share of the fuel tax burden
In a letter to the Chancellor in advance of the Pre Budget Report AirportWatch has pointed out that those who travel by air have it easy compared to those who travel by car. Motorists pay 58p a litre duty on their fuel. Motorists pay a further 22p VAT (or more depending on the fuel price) on their fuel. Motorists pay 20% VAT to have their car serviced. Airlines pay NONE of these. Motorists pay 20% VAT to buy their car. Airlines pay no tax on new aircraft. APD would need to be quadrupled to compensate for the fuel duty and VAT exemptions enjoyed by the aviation industry. In 2010/11 the exemption from fuel tax and VAT was worth more than £11 billion to the airlines.
17.11.2011 (AirportWatch press release)
AIRLINES MUST TAKE FAIR SHARE OF FUEL TAX BURDEN
In a letter to the Chancellor (see below) in advance of the Pre Budget Report AirportWatch has pointed out that those who travel by air have it easy compared to those who travel by car –
• Motorists pay 58p a litre duty on their fuel. Airlines pay nil. (see link )
• Motorists pay a further 20% VAT on their fuel. Airlines pay nil. (The taxes on petrol and diesel are around 81 p per litre, if petrol costs 138p per litre).
• Motorists pay 20% VAT to have their car serviced. Airlines pay nil.
• Motorists pay 20% VAT to buy their car. Airlines pay no tax on new aircraft.
Air Passenger Duty (APD) would need to be quadrupled to compensate for the fuel duty and VAT exemptions enjoyed by the aviation industry.(2) And whilst motorists complain about swingeing year on year increases in the cost of filling up at the pump, the vast majority of airline passengers still pay APD at its lowest rate of £12, just £2 more than it was in 1997.(3)
Many motorists rely on their cars to travel to and from work or for their weekly shop but the vast majority of flights are for leisure purposes and, despite the advent of so-called ‘cheap flights’, air travel is increasingly becoming the preserve of an affluent minority. Fewer than half the UK population took any flights at all in 2010 and those who did had average household income in excess of £50,000. (4) .
Chairman of AirportWatch, John Stewart, commented:
“We hear a lot of ritualistic grumbling from the aviation industry about levels of Air Passenger Duty but they conveniently forget to mention the £11 billion a year subsidy they enjoy from paying no fuel duty and no VAT. They also conveniently forget to mention their own surcharges. In these difficult economic times, the airlines must be made to take their fair share of the fuel tax burden.”
ENDS
NOTES FOR EDITORS
1. A copy of the AirportWatch letter to the Chancellor is below.
2. In 2010/11 the exemption from fuel tax and VAT was worth more than £11 billion to the airlines. After deducting APD revenues, the net benefit is around £9 billion – equivalent to a subsidy to the airlines of about £360 per household. Even the 53% of the UK population who do not fly – mainly the less affluent – find themselves subsidising the aviation industry.
3. APD for economy short haul flights applied at a rate of £10 per passenger from 1997 until 2001 when it was halved to £5.00. The £10 rate was restored in 2007, increased to £11 in 2009 and to £12 in 2010. In 2010/11, 77% of all passengers paid the lowest (£12) rate.
4. Actual figure = £50,139. Source: CAA 2010 Passenger Survey, Table 14.
5.The evidence is summarised and presented in an SSE research paper ‘Aviation, jobs and the UK economy’ at http://www.stopstanstedexpansion.com/documents/SSE_scoping_response_-_Annex_A.pdf
In addition, the Telegraph writes (5.11.2012) that: ” Figures from the House of Commons Library show that for a typical litre of petrol costing 138.3p, 81p goes to the Treasury in fuel duty and VAT”.
Letter
17 November 2011
to
Rt Hon George Osborne MP
Chancellor of the Exchequer
HM Treasury
1 Horse Guards Road
London
SW1A 2HQ
Dear Chancellor
AirportWatch is an umbrella organisation uniting the national environmental organisations, airport community groups and individuals opposed to unsustainable aviation expansion and its damaging environmental effects, including climate change.
We are aware of the lobbying pressure being applied to you by the aviation industry to reduce Air Passenger Duty (‘APD’) and we herewith set out some of the counter arguments.
We note that you are also being pressed by the road transport lobby for tax concessions and, whilst it is not part of our remit to argue the case for road users, it is irrefutable that those who travel by air are lightly taxed compared to those who travel by car –
• Motorists pay 58p a litre duty on their fuel. Airlines pay nil.
• Motorists pay a further 22p VAT on their fuel. Airlines pay nil.
• Motorists pay 20% VAT to have their car serviced. Airlines pay nil.
• Motorists pay 20% VAT to buy their car. Airlines pay no tax on new aircraft.
APD would need to be quadrupled to compensate for the fuel duty and VAT exemptions enjoyed by the aviation industry. And whilst motorists complain about swingeing year on year increases in the cost of filling up at the pump, the vast majority of airline passengers still pay APD at its lowest rate of £12, just £2 more than it was in 1997.
Many motorists, particularly in rural areas, rely on their cars to travel to and from work or for their weekly shop but the vast majority of airline flights are for leisure purposes, increasingly the preserve of an affluent minority despite the advent of so-called ‘cheap flights’. Fewer than half the UK population took any flights at all in 2010 and those who did had average household income in excess of £50,000. In short we believe that the aviation industry has very little to complain about, especially in these difficult economic times.
We would also ask you to examine the economic evidence relating to the price of air travel and the balance between inward and outward tourism. This evidence clearly indicates that increasing the price of air travel has a significant dampening effect on outward tourism but very little effect on inward tourism to the UK, thus making a positive contribution to jobs, economic growth and the UK trade balance.
In conclusion, we are confident that any proper review of the evidence will clearly indicate that there is a compelling case for a substantial increase in APD on the grounds of fiscal equity and fairness. Increasing APD would also contribute towards the deficit reduction plan and to UK employment, investment and economic growth.
Yours sincerely
John Stewart
Chairman