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Virgin Calls For Short-Haul APD Hike

by Jason Gorringe, Tax-News.com, London

28 July 2011


The UK government has been urged by airline Virgin Atlantic to consider addressing the disparity between the taxation of short-haul and long-haul flights under the UK's Air Passenger Duty (APD) regime.

Virgin noted that while a tax increase would have a negative overall impact on the industry, an increase in the lowest rate, on short-haul flights, to GBP20 (USD33), from GBP12 currently, would raise an extra GBP650m a year. This would address the disparity, which, Virgin noted, has seen tax increase by 20% on short-haul flights while long-haul flights such as to the Caribbean have seen a 50% increase.

Virgin Atlantic chief commercial officer Julie Southern said: "APD has rocketed in recent years and with a family of four potentially facing a GBP260 tax bill to fly to Orlando, steps need to be taken to bring this back under control."

"APD is clearly not supporting the government's environmental objectives. If this suffocating tax is going to stay and even be raised higher in the coming years, it must be fairer and drive the right behaviours from business and consumers."

The government announced in the March 2011 budget that the proposed November 2011 increase to APD rates would be deferred until April 2012. Currently, APD is charged in four bands depending on the distance to the passenger's destination. Since November 1, 2010, a band A passenger (flying up to 2,000 miles) pays GBP12 per ticket in economy class and GBP24 in business class. Band B (between 2,001 miles and 4,000 miles) pays GBP60 and GBP120; Band C (4001 to 6,000 miles) pays GBP75 and GBP150; and Band D (over 6,000 miles) pays GBP85 and GBP170. Bands are mostly based on the distance between London and the capital city of the destination country.

The Caribbean has long complained that APD is damaging its vital tourism industry because the region has been categorized as a Band C destination, despite the fact that the Caribbean is nearer to the UK than destinations on the west coast of the US, which are in Band B, highlighting the arbitrary nature of the levy.

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

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