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UK MPs Back Aviation Tax Overhaul

by Amanda Banks,, London

04 September 2012

British Members of Parliament have backed representations from the UK aviation industry in a new report, which calls for a drastic rethink to the UK's aviation policy.

The report, from the All-Party Parliamentary Group on Aviation, says that government policy is stifling the nation's economic potential by imposing the highest tax burden in Europe under its Air Passenger Duty (APD) regime and by blocking the expansion of Heathrow, the UK's only air transport hub, and Europe's busiest airport in terms of passenger traffic.

The report calls for a quantitive cost-benefit analysis of the impact of APD on growth and employment in the UK, against the revenues derived from the levy; and urges the government to drop its opposition to the creation of a third runway at Heathrow or to draw up plans for a new purpose-built hub airport.

Insufficient capacity at Heathrow has become increasingly problematic, particularly for domestic air linkages, the report says. 18 regional airports were served by Heathrow in 1990, it highlights, but this figure has substantially dropped to six, endangering inclusive growth throughout the UK. "The UK's hub airport [Heathrow] is of national strategic importance and should be supported by government policy," the report says.

In support of statements from over 60 industry groups, the MPs have warned that if the UK industry continues to be restricted by insufficient air transport infrastructure and a prohibitive tax regime, the UK aviation industry and the economy in general will suffer a fall in international competitiveness.

Chair of the Aviation All-Party Group, Brian Donohoe said: “The findings of our report advocate a new direction for UK aviation and call upon all those groups, organizations, companies and government departments with an involvement in the sector to look again at how aviation can be part of the solution to the UK’s economic problems in a sustainable way."

“In order to achieve the greatest possible economic and social contribution from aviation, we need two things from government: a forward looking aviation policy that allows for aviation growth; and a new approach to the taxation of aviation. Combined, a new approach could not only energise the sector but also provide a firm foundation for the UK’s economic recovery."

“In common with all other sectors, aviation must continue to address its carbon emissions and environmental impacts; it has already achieved significant improvements but can and must do more. The EU Emissions Trading Scheme is supported by this Group and provides a good framework for aviation’s emissions to be reduced to the same levels achieved in 2005 by 2050.”

Secretary of the All Party Group, Paul Maynard, added: “Our inquiry finds that the case for higher and higher taxes on air travel has not been made. Indeed, we believe that by having the highest flight taxes in the world the UK’s recovery is being made harder not easier. It is one of our key recommendations that the Treasury begins a rigorous review of Air Passenger Duty with a view to unleashing aviation as a real economic catalyst.”

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

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