London Chamber of Commerce & Industry says London should keep £1bn raised in APD from its airports
Colin Stanbridge, chief executive of the London Chamber of Commerce & Industry, says the amount of APD (Air Passenger Duty) levied on flights using London airports should be allocated to London. As the largest number of long haul flights are from Heathrow, it generates the most APD, with around £1 billion – around one third – coming from London airports. Mr Stanbridge says: “Now that Edinburgh and Belfast will control APD in their areas surely it must be the case that London will follow suit.” The Chamber of Commerce wants there to be no tax at all on flying, and for APD to be abolished. But meanwhile it would be “more appropriate for London’s Mayor to oversee London airport APD….. We would like to see the funds invested in critical infrastructure projects in the capital such as Crossrail 2, Tube upgrades or a much-needed new road bridge for east London to name but a few. …The devolution of responsibility for this major transport tax would represent another power for London in the ongoing fight for greater fiscal devolution to the capital to help stimulate local growth”. The Treasury estimates full abolition of APD would result in up to £4bn in lost revenue per year – other estimates are higher.
London should keep £1bn raised in tax from its airports, say campaigners
MATTHEW BEARD, TRANSPORT EDITOR (Evening Standard)
9 December 2014
London should be able to keep to the £1 billion “flying tax” revenues raised at the capital’s airports, a campaign group said today.
The call to give the mayor control of the £1bn tax windfall follows the Government’s decision to allow Scotland to keep the levy raised from its airports.
Heathrow and London City airports contribute around £1bn a year – a third of the national total – in Air Passenger Duty, or airport departure tax.
APD was introduced in 1994 and is charged on passengers departing a UK airport on aircraft with more than 20 seats. It is charged based on the distance between London and the capital city of the destination country in four bands.
A family of four flying in economy class from the UK to the US pays £260 in APD tax.
Colin Stanbridge, chief executive of the London Chamber of Commerce & Industry, said: “Now that Edinburgh and Belfast will control APD in their areas surely it must be the case that London will follow suit.
“We know from our members that APD is a barrier to getting them exporting and ultimately we would like to see this Treasury tax on flying abolished – a major PWC study last year found that abolition of APD would be good for UK PLC as a whole – with the economy likely to grow by £16billion.
“However in the short term, if APD is to remain ‘on-the-books’ then it would much more appropriate for London’s Mayor to oversee London airport APD.
“We would like to see the funds invested in critical infrastructure projects in the capital such as Crossrail 2, Tube upgrades or a much-needed new road bridge for east London to name but a few.
“I am sure that regardless of whoever holds the future Mayoral position he or she would certainly take into account the needs of the capital’s business, leisure and tourism sectors when approaching the matter.
“The devolution of responsibility for this major transport tax would represent another power for London in the
ongoing fight for greater fiscal devolution to the capital to help stimulate local growth”.
APD has increased by more than 325 per cent to key economies such as China and India since 2007 – presenting a major hike in fares for both leisure and business travellers heading to new markets.
Figures from the LCCI show that 59 per cent of firms see APD as a major barrier to exporting, as many firms need to visit new markets to promote their business and secure overseas deals.
APD has normally been controlled centrally by the Treasury, however the APD regime is changing across the UK as last week’s Autumn Statement saw the Chancellor confirm that APD would be devolved to the Scottish Parliament. The Northern Ireland Assembly has had similar powers since 2011.
The Chamber argues that the time is right to look at London getting power over APD revenues generated at the two main airports within the Mayor’s jurisdiction – Heathrow and London City – which apparently account for up to around £1bn of the £3bn generated by APD across the UK.
A PWC study claimed there would be an increase in investment and exports as well as extra 60,000 jobs from abolishing APD. However the Treasury estimates full abolition would result in up to £4bn in lost revenue.
Families flying off on holiday will benefit from the Chancellor’s decision to scrap the APD for children under 12 year of age from May 1 2015. APD will be abolished for children under 16 from 2016.
A spokesperson for the Mayor of London said: “It is an interesting proposal and a welcome contribution to the debate. However the Mayor’s current focus remains on working with other major cities around the country to persuade the Government to devolve property taxes as in Scotland and Wales.”
More about Air Passenger Duty here