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US Travel Industry Calls For Phase-Out Of UK APD

by Leroy baker, Tax-News.com, Washington

01 May 2012


A total of thirty associations within the United States travel industry have written to Chancellor of the Exchequer George Osborne urging the United Kingdom government to abandon plans for a further increase in air passenger duty in March 2012, and, instead begin a progressive reduction of the tax.

Including the Air Line Pilots Association, Air Transport Association, American Hotel and Lodging Association, American Society of Travel Agents, Association of Corporate Travel Executives, Business Travel Coalition, Global Business Travel Association, International Air Transport Association, US Chamber of Commerce and the US Travel Association, the organizations are concerned that the APD amounts to a “tax grab targeting airline passengers for the purpose of deficit reduction,” and that it “unfairly penalizes airlines and their customers”.

In the letter, they note that “similar proposals for an ADP in the Netherlands, Belgium, and Ireland were scrapped altogether after concluding that the harm to jobs and taxable economic activity would exceed ADP-related revenues raised by the tax. It is our hope that the UK will follow last year’s decision to not increase the APD rate.”

They point out that, currently, the APD “is the largest tax passengers face anywhere in the world. Such a high tax negatively influences travel decisions of those contemplating travel from or to the UK.” An increase in taxes would, in their opinion, clearly impact the propensity of individuals to travel by air, “as has been evidenced by the well-documented decrease in traffic from UK airports, particularly when compared to other European Union airports,” while the tax also makes the UK a less desirable destination, “ultimately depriving the UK economy of the substantial benefits that international visitors provide”.

It is therefore requested that the UK should freeze the current APD tax rate as a prelude to a phase-out. "We believe that there are more economically sound ways to reduce the UK budget deficit than strangling tourism and air-service trade between our two countries,” the associations argue.

TAGS: tax | business | air passenger duty (APD) | aviation | United Kingdom | travel and tourism | United States

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