Exploding the myths of air tax hikes



Claims that Air Passenger Duty (APD) will deliver environmental benefits have been debunked by Airlines ahead of the tax increases that come into effect this weekend.

From Sunday (November 1), APD will be applied in four bands based on the distance between London and the capital city of the destination country, with one rate for economy cabins and one for premium.

A second increase in APD that comes into effect in November 2010 will become payable in mid-November 2009 on bookings made for travel beyond November 1 next year.

In total, the increases will push APD up by 50 per cent on flights to the US, 87 per cent to the Caribbean, and 112 per cent to Singapore and Australia compared to today's rates.

With the embattled airline industry fighting the biggest financial storm in its history, airlines across the world need every s[bad language filtered out] of help they can get to survive. But while other governments are taking action to help aviation, the UK government is saddling carriers with this even greater financial burden.

Six myths of APD
The government defends the increases as environmental and fair but the reality is exactly the opposite

APD IS an environmental tax
The proceeds from APD go into the Treasury’s general coffers and are not ring-fenced for any environmental schemes.

The rises are needed to ensure aviation pays its environmental costs
The Department for Transport paper ‘Aviation emissions cost assessment 2008’ showed that aviation more than paid for its environmental costs through APD even before the 2009 increases were taken into account.

The revenue from APD more than doubled between 2006/2007 (£971 million) and 2007/2008 (£1994 million) despite a 1.6 per cent decline in passengers from 2007 to 2008.

Taxation reduces emissions
Taxes on flying provide no incentive for airlines to invest in technology to become more carbon efficient. APD rates are the same for each route, irrespective of the emissions levels of the aircraft flying it. Carbon trading is far more effective than taxation, as it provides a financial incentive for the aviation industry to improve its environmental performance.

Aviation is undertaxed
No other country imposes flight taxes as high as APD, and air travel from the UK is the most heavily taxed in the world. Within the UK, there is no equivalent of APD levied on any other form of transport. Despite this, aviation is the only transport mode that pays for all its own infrastructure without any taxpayer subsidy.

APD rises will only affect airlines
Inbound tourism earns the UK more than £16 billion a year – and is bound to be adversely affected by the APD rise on the return leg of overseas visitors’ flights. It is estimated that thousands of jobs in the UK tourist industry could be put at risk by the APD hikes. The Airport Operators Association, which represents 72 UK airports, says the rises, coming on top of the recession, threaten the survival of some regional airports as airlines and charter companies cut services.