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APD Sapping UK Economy, Report Argues

by Robert Lee, Tax-News.com, London

16 March 2012


Scrapping the Air Passenger Duty (APD) would help UK job creation and boost the economy, according to the World Travel & Tourism Council (WTTC).

The claim is made in new research conducted by Oxford Economics for the WTTC, which slams the APD as an "air stealth tax". Axing the levy would, the WTTC says, raise the UK "gross value added" by between GBP1.8bn (USD2.8bn) and GBP2.9bn in 2012 alone. This, it says, would be the result of an anticipated boost to the aviation and tourism sectors from increased passenger numbers. In turn, this could create an extra 38,000 to 61,000 jobs.

In addition, the WTTC anticipates that the income available to consumers from lower airline ticket prices would provide a stimulus to consumer spending. This could improve the UK gross value added by GBP1.3bn and add another 30,000 jobs to the economy, it argues. Ultimately, the WTTC concludes, scrapping the tax could result in an additional 91,000 British jobs being created and add GBP4.2bn to the economy in 12 months.

A new round of changes to APD rates will enter into force in April, of which the WTTC is highly critical. It calculates that the planned increases will see a family of four pay GBP52 in APD on a flight to Malaga in Spain, rising to GBP260 for a trip to Florida and GBP368 for a flight to Australia.

David Scowsill, WTTC President & CEO, commented: “Air Passenger Duty is a completely disproportionate tax on people’s holidays and is hitting business travel hard. When the economy needs help, it is economically illogical to continue with a tax that costs the country some 91,000 jobs and as much as GBP4.2bn."

Scowsill concluded: "Travel and tourism grew by 4.1% in the UK last year, but is forecast to slow to 1.3% in 2012. This slowdown is partly due to the impact of Air Passenger Duty, which is dampening demand. This tax is damaging the economy at a crucial time, and is having a negative effect on trade with countries in the Caribbean, Africa and Asia. We urge the UK government to recognize the impact on the overall economy and reduce Air Passenger Duty."

TAGS: tax | air passenger duty (APD) | aviation | United Kingdom

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