Air passengers in the UK face a seven percent hike in the average cost of a short-haul ticket. This comes after the air passenger duty (APD) was doubled in a parliamentary pre-budget report.The extra duty, which will net the UK treasury an extra one billion pounds (over $1.97 billion), will see the APD rise from £5 to £10.
The announcement was part of Gordon Brown’s pre-Budget speech as Chancellor. A statement said that “the Government remains committed to inclusion of aviation within the European Union Emissions Trading Scheme (EU ETS) but recognises the challenges in introducing emissions trading to this sector.”
The doubling of the APD will come into affect on 1 February 2007. David Soskin, CEO of Cheapflights said the rise was “a slap in the face for the UK’s less affluent travellers . It will do nothing to stop global warming and is merely another stealth tax in an attempt to plug the huge gap between the Government’s profligate spending and its income.”
“In the EU aviation contributes 2.7% of all CO2 emissions. By unfairly demonising the airlines to justify higher APD, Mr Brown risks delaying introduction of new and more efficient aircraft. The Boeing 787 for instance will use 20% less fuel.”
“The Green lobby and “Dave” Cameron - with their unjustified and prejudiced-based assault on the airlines and the travelling public - have handed this tax on a platter to Mr Brown. They should all, including Mr Brown, feel utterly ashamed at making life even harder for those on low incomes. “
The move was welcomed by the Green Skies Alliance, spokesman, Jeff Gazzard said it was “sound economics but mathematically innumerate, environmentally illiterate and highly damaging to the Government’s climate change policies.”
“UK airlines and passengers still get a virtually free ride paying just a small fraction of the environmental damage they cause.”
Gazzard added: “This rise in APD is very frustrating for NGO’s working in this sector - we are winning all the arguments hands down but are still unable to get the right level of taxes on ticket prices!”
While UKinbound utterly condemned the increase. Stephen Dowd Chief Executive of UKinbound said “This is gesture politics of the worst kind. The Chancellor has dealt a severe blow to the inbound tourism industry of the UK just to score points with the environmental lobby. However, this tax increase will do nothing to reduce global carbon emissions as the money raised will disappear into the Treasury’s coffers rather than to projects that address climate change.”
“Tourism is now a very price sensitive business and the UK already faces stiff competition from destinations with less voracious tax regimes. This has resulted in the UK’s share of the global market reducing for each of the last 10 years. The level of taxation on visitors to the UK is currently the third highest in the world and it seems the Chancellor is determined to ensure we get the dubious honour of being number one in this category.”
“Rather than tackle the real issue of incentivising airlines to reduce their carbon emissions and encouraging consumers to demand more environmentally friendly aircraft the Chancellor has chosen the easy option of simply increasing the existing Air Passenger Duty. This is a crude, blunt tax that causes a disproportionately large burden to fall on the poorest travellers.
“Demand studies provided to the Government clearly demonstrate that this increase in APD will only have a modest impact on UK citizens travelling abroad as most will just pay the additional tax. However, it will significantly reduce demand for inbound tourism; thereby reducing our export earning potential and most likely increasing the tourism trade deficit currently running at £17Bn a year”
“Tourism needs a fiscal environment that will encourage inward investment to improve the range and quality of the products we offer. This is particularly important in this crucial period leading up to the London 2012 Olympic Games but today the Chancellor has demonstrated that he either does not understand the fragile nature of tourism demand or does not care.”