In the March Budget, the Government once again overlooked the opportunity to address the issue of rising Air Passenger Duty (APD). APD is a tax levied on passengers flying out of the UK and is the highest aviation tax in the EU for both short-haul (Band A) and long-haul (Band B) journeys in all classes. The Government introduced APD in 1994 at a rate of £5 for flights in the EEA and £10 for flights elsewhere. As of April 2017 the tax is now £13 for short haul and £75 for long haul economy flights, doubling for business class.
Not only will this add to the significant increase since APD was introduced, it is also completely at odds with rates across other EU countries, with just six others levying a similar tax and all at a much reduced rate. For example, the UK’s £13 charge for short haul is more than twice the rate of Germany’s equivalent which is £5.70, and more than three times the rate of France at £4.20. The contrast is even starker for long haul with the UK’s charge of £75 comparing unfavourably with Germany’s £32 and France’s £14.50.
This puts the UK at a major disadvantage compared to other countries especially in its attempts to attract tourists and international business as well as improve trade.
In order to tackle this issue companies and trade bodies from across the industry came together to form the campaign group A Fair Tax on Flying. The group is calling for the tax to be significantly reduced.
In the past, the campaign achieved significant success in convincing the Government to abolish the tax for children. In the 2014 Autumn Statement, it was announced that APD on economy flights for children under 12 would be abolished from May 2015, and APD for under 16s would be abolished from March 2016.
The campaign is now focussing on the need to reduce APD in order to support Britain’s growth post-Brexit. Following the UK’s vote to leave the European Union, it is important that Britain reaches out to its international partners and begins to develop better trading relationships with global markets, such as commonwealth countries. As the situation stands, APD acts as a barrier for trade to and from these markets. The punitive level of tax hampers the development of new routes. Additionally, travellers who work hard all year and want to go on holiday or visit friends and families overseas are penalised by the increasing tax. APD revenue is set to rise by a further £1bn to £4bn by 2021/22 and an estimated two thirds of the total cost falls on households. The Prime Minister must consider cutting the tax to help make Brexit a success.
In the run up to this year’s Spring Budget, the campaign achieved significant media coverage in the Sunday Telegraph, the Times, and the Sun, highlighting the above arguments around exports and families. 2017 is a unique year in that there will be two budgets as well as the General Election, providing the opportunity to influence MPs and the Government in the run up to the Autumn Budget. The campaign will continue to make these arguments and call for a significant reduction to ensure that flying is fairer for all.
Alan Wardle is Director of Public Affairs at ABTA and A Fair Tax on Flying Steering Committee member.