IATA Calls On UK Government To Abandon Aviation Duty

Robert Lee, Tax-News.com, London

07 May 2008

The International Air Transport Association (IATA) has called on the UK government to abandon its proposed Aviation Duty. The call came in the Association’s response to the UK government’s request for consultation.

“The proposed Aviation Duty is nothing more than a blunt revenue instrument. It has no credibility as a driver of improved environmental performance. And the revenue will not be used to support environmental objectives,” wrote Giovanni Bisignani, IATA’s Director General and CEO, in a letter to Chancellor Alistair Darling.

“The proposal fails to satisfy the basic principles advanced by the government to justify it,” added Bisignani.

“It is incompatible with UK obligations under international law. It will not improve environmental performance. It ignores that air transport already completely covers its environmental costs. It will lead to serious discriminatory economic impacts and market distortions. It will result in double taxation and reduce the UK’s competitive stance."

"It is neither simple, nor transparent, nor coherent. In short, as an approach, it could not be more wrong. The government should focus on other industries that, unlike aviation, are not contributing their fair share."

Air Passenger Duty was doubled in 2007 and now collects GBP2bn (USD3.9bn) annually. From 1st November 2009, the proposed Aviation Duty would replace this with a GBP2.5bn yearly collection.

By 2011/12 this would grow to GBP3.5bn. Additionally, the UK plans to join the local EU emissions trading scheme from 2012 with an additional cost burden.

The air transport industry has a four-pillar strategy to address climate change, based on technology investment, effective aircraft operations, efficient infrastructure and positive economic measures — including an effective emissions trading scheme that is fair and global.

“I want to know where the money will go. How many trees will the Chancellor be planting with GBP 2.5bn?" asked Bisignani.

"Padding the UK budget at the expense of holiday-makers, business travellers or exporters is not sound environmental policy. Instead of inventing new taxes with convoluted calculation methods, governments must support investment in basic green technology research, assist air navigation service providers to straighten out routes and allow airlines to operate as fuel efficiently as possible. And when it comes to economic measures, let’s focus on a global emissions trading scheme,” he concluded.

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