Australia's Crean Hits Out At UK Air Passenger Duty

by Mary Swire, Tax-News.com, Hong Kong

26 January 2010

Australia’s Trade Minister, Simon Crean, during a visit to London, has raised the great concern felt by the Australian government about the discriminatory effects of the UK’s Air Passenger Duty (APD).

In an interview he said: “We’ve indicated to the (UK) government that whilst this was originally said to be a duty for environmental purposes, it is now accepted that it’s just for revenue raising purposes. We’ve said that we understand governments need to raise revenue, but that they shouldn’t do it in the discriminatory way in which this tax applies.”

“It hurts us particularly because people flying to Australia from here pay by far the biggest premium,” Crean continued. As the APD is due to increase again next November, “we’ve urged both the government and the opposition to re-look at this, and to take out the discriminatory nature of it.”

He added that both Lord Mandelson, the UK’s Secretary of State for Business, and Kenneth Clarke, the Shadow Business Secretary, were surprised at the discriminatory nature of the tax and its impact, and they have undertaken to raise it with the UK Treasury.

When asked how damaging the APD is for Australian tourism, Crean said that, given the importance of the services trade between the two economies, people-to-people contact is very important. The APD acts against that and does not help either two-way trade or the strengthening of the countries’ relationship.

The APD is to rise in two phases by up to 113% by November next year, with the first stage of the increase having come into force on November 1, 2009. Its banding system, dependent on destination and class of travel, increases the duty on long-haul destinations, like Australia. Over the two increases, the tax on long-haul economy flights will rise from around GBP40 (USD65) to GBP85, and long-haul premium economy and business class passengers will pay GBP170 in tax.

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