23 Mar

ABTA Response to APD Announcement in Budget

ABTA welcomes the announcement by Chancellor George Osborne to delay an in line with inflation increase in Air Passenger Duty and review the arbitrary and illogical banding system which sees flights to the Caribbean taxed at a higher rate than considerably longer ones to the West coast of the USA.

However, ABTA regrets the Government’s decision to back track on its manifesto commitment to replace Air Passenger Duty with a per plane duty which would incentivise airlines to fly with a higher load factor and to invest in more modern, less polluting aircraft.

Mark Tanzer ABTA Chief Executive said: “We are pleased that the Chancellor has seen sense and resisted the temptation to increase aviation tax this year.”

“It is also good news that he has recognised that the current system of aviation taxation has structural flaws in terms of banding and premium economy. We will now be reviewing the details of the consultation and the proposed tax changes to make sure that changes to the way APD is collected is not used as a cover to increase taxation further.”

“The freeze in APD this year will be good news to holidaymakers with travellers paying £145m less than they would have had without this cut. It is only a brief pause from the continuing hiking of APD though as travellers will be hit in 2012 by a double tax increase totalling £300 million on top of the £2.2 billion already going to the Treasury”.

“We will be seeking clarification from Government as to how much of the £2.2bn they expect to raise from emissions trading will be from aviation. Whilst the government has listened to our Fair Tax on Flying campaign on freezing APD this year and reviewing banding and premium economy we still have work to do to convince them to offset income from emissions trading against total APD revenue. This sounds technical, but the financial impact on travellers could be considerable if government continues on the path of taxing flights with APD and carbon from planes with ETS.”

ABTA also welcomes the Government’s commitment to consult on the inclusion of private and business jets within the scope of aviation taxation - an unfair and unjustifiable anomaly. Inclusion of private jets within the tax regime was part of ABTA’s 2010 election manifesto.

Also included in the consultation on APD is a commitment to review the current tax status of premium economy fares which are taxed at the same rate as business and first class fares.

The Budget also estimates an income of £2.2bn by 2015/16 from the EU’s Emission Trading Scheme and income of £400m this coming year. Aviation enters the Emission Trading Scheme from 1 Jan 2012. ABTA is calling on the Government to offset aviation’s contribution to these amounts against revenue raised through Air Passenger Duty.