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British Public Rallies Behind Fair Aviation Tax Campaign

by Jason Gorringe, Tax-News.com, London

28 August 2012


A lobbying initiative spearheaded by the Association of British Travel Agents has received significant support from the British public and international travellers with more than 100,000 consumers joining an online petition to pressure politicians to overhaul the nation's aviation tax policy, which has been said to be driving the domestic industry into the ground in pursuit of new tax revenues.

Since the launch of the lobbying initiative at the start of the summer, 100,000 passengers have contacted their local members of parliament opposing the excessive burden that has been placed on UK air passengers, which has made the UK the most expensive nation for inbound and outbound flights in Europe, and has led to the decline of Heathrow, which narrowly remains Europe's busiest airport.

Air passenger duty (APD) has developed into a cash cow for UK coffers at the expense of the domestic industry. Tax on fares has risen markedly since the levy was first introduced at a rate of between GBP5-10 in 1994, to a tax of up to GBP184 on long-haul business flight fares. This is due to rise again to GBP188 in April 1, 2013, and business jets are to be brought into the tax net.

Holidaymakers or business travellers flying from the UK pay by far the highest levels of flight tax in Europe. For example, a family of four flying from the UK to Florida in economy class pay GBP324 in flight tax, while if they fly to Australia they can expect to pay an eye-watering GBP368.

The Fair Tax on Flying campaign challenges the UK government to reduce the tax payable on UK flights to make the nation internationally competitive, and address distortions which means a higher rate of tax is charged on Caribbean flights despite their being an equal distance to some American destinations that are subject to a lower band of APD. It also calls for the government to address the taxation of premium economy tickets which despite offering but a few extra inches of legroom are classed the same as first class flights, and pay double the rate of tax as economy.

The campaign has highlighted that the tax is damaging the UK economy. Outbound traffic to the Caribbean has fallen by 17% in the past five years, and inbound flights have dropped 32%. Heathrow Airport, the UK's busiest and main international hub, has fallen from 1st to 5th place in 2011 in Europe in terms of destinations served in the last twenty years.

The campaign reported that following its latest initiative 75 MPs from all the main parties have signed a parliamentary motion calling for a review into the APD, and additional efforts to pressure for change are under consideration by ABTA.

When launching the campaign, Mark Tanzer, ABTA's Chief Executive, stated:

“When it comes to the future of tourism in the UK, the government’s words and deeds simply do not match up. The Prime Minister has identified tourism as one of the top five industries to drive growth, yet aviation tax has become a punitive stealth tax. It is vital that the government understands the impact it is having on the health of the tourism industry in the UK. The industry is willing to pay its way, but a 26-fold increase since 1994 puts the UK at a competitive disadvantage when compared with our European neighbours and punishes UK holidaymakers and business travellers unfairly. Air passenger numbers have decreased by 22% since 2007 [on 2011 levels], and increasing APD yet further will cause significant strain on hard-pressed family budgets and hamper the UK economy’s growth.”

Keith Williams, Chief Executive of British Airways, said:

“We recognise the exceptional difficulty of the country's fiscal position and we are content to pay our fair share. But the UK airline industry is already the most heavily taxed in the world and any further tax burden will be counterproductive to the country's economic recovery."

Julie Southern, Virgin Atlantic's Chief Commercial Officer, added:

"Virgin Atlantic is supporting the Fair Tax on Flying campaign so that the government can be in no doubt that the industry is united against further increases in Air Passenger Duty. APD is not just a tax on British families, it's a tax on inbound tourism and trade and investment too. It is shocking that the UK has one of the least competitive air taxes in the world. Everyone knows the government needs tax revenue; we're simply asking the government to recognise that our passengers are already paying more than their fair share."

TAGS: tax | business | aviation | budget | Australia | trade

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