Government not keen on a frequent flyer levy to replace APD

There have been many requests to government to consider a frequent flyer levy, by which people could have one leisure flight per year with no tax, or little tax – but every subsequent flight would pay successively more tax. So someone going on their 5th or 6th flight of the year would be paying a lot of tax. This could replace Air Passenger Duty, which is just £13 for flights of under 2,000 miles, and £84 for longer flights. It could have the effect of reducing overall air travel demand, as perhaps 70% of flights are taken by 15% of the population. The scheme has its problems, and details would have to be sorted out – in terms of administration and link to carbon emissions. A Labour MP, Steve McCabe, has asked a parliamentary question, about what assessments the government has made of the potential administrative complexity of the scheme. The government replied that, after receiving responses to its 2021 consultation, “it was minded to retain APD as the principal tax on the aviation sector, noting in particular concerns about the possible administrative complexity and data processing, handling and privacy of a frequent flyer levy.”
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Parliamentary question:

Steve McCabe Labour, Birmingham, Selly Oak:
Question:  To ask the Chancellor of the Exchequer, with reference to the Answer of 26 April 2022 to Question 157540 on Aviation:

Taxation, ​what assessment he ​has made of the potential merits of tolerating the potential administrative complexity of a frequent flyer levy to facilitate the move towards net zero.

Helen Whately The Exchequer Secretary
Government answer:  As part of a consultation on aviation tax reform between March and June 2021, the Government sought views on whether a frequent flyer levy could replace APD as the principal tax on the aviation sector.

In the responses received to the consultation, the Government received a wide range of views on a frequent flyer levy. Some stakeholders, including those from the aviation industry, strongly opposed any suggestion that APD should be replaced with a frequent flyer levy, on the grounds that it would be significantly more difficult to administer. Conversely, environmental stakeholders supported the introduction of a frequent flyer levy, considering that the benefits of such a levy outweighed any potential administrative complexity.

Following the consultation, having considered all views received carefully, the Government published a response which outlined that it was minded to retain APD as the principal tax on the aviation sector, noting in particular concerns about the possible administrative complexity and data processing, handling and privacy of a frequent flyer levy.

Full details of the consultation and the Government’s response can be found at: www.gov.uk/government/consultations/consultation-on-aviation-tax-reform

https://www.theyworkforyou.com/wrans/?id=2022-05-11.595.h&s=Aviation

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Earlier, before the consultation that ended in June 2921:

Treasury consulting on a Frequent Flyer Levy to tax aviation (Treasury not keen on it)

The Treasury has a  consultation (ending 15th June) on several aspects of the taxation of aviation. The first section was on domestic APD (Air Passenger Duty); the second part is on changes to the international APD bands  and also on a Frequent Flyer Levy (FFL). The Treasury document says:  “The Committee on Climate Change and several environmental stakeholders have suggested that the government should introduce a frequent flyer levy, in order to tackle the environmental impacts of flying in an equitable way. … A frequent flyer levy would seek to constrain overall demand for flights, by increasing the amount of tax liability due, according to the number of flights a passenger had previously taken. Unlike APD, the tax would be levied on the individual, rather than the airline.”  It stresses the various difficulties in administering the tax (a great deal of data to be collected, people with multiple passports, people who need to fly often…) It makes out that people who fly a lot already pay more APD, ignoring the key point of the FFL that the tax ramps up for each flight, so the 5th or 10th flight in one year costs a great deal more, than the standard APD rate on each. It concludes: “The government is therefore minded to retain APD as the principal tax on the aviation sector and not introduce a frequent flyer levy as a replacement, and welcomes views on this position.” 

https://www.airportwatch.org.uk/2021/04/treasury-consulting-on-a-frequent-flyer-levy-to-tax-aviation-treasury-not-keen-on-it/

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