Air Passenger Duty relief is positive but more to do

December 01, 2014 3:44 PM

There has been welcome speculation over the past weeks and days that the campaign, led by Andrew Bridgen MP and supported by groups including ourselves, to eliminate Air Passenger Duty on flights for children under 12 could well come to fruition in this Wednesday’s Autumn Statement.

We have long pointed out the huge burden that Air Passenger Duty places on families enjoying a well-earned break in the sun. For a family of four going to Florida, Air Passenger Duty can add some £138 to the cost of a holiday; even closer to home, a family with four children see their flight bill increased by £52 which goes straight to Whitehall bean-counters.

The Chancellor scrapped the two highest bands of Air Passenger Duty in the Budget – a relief in particular for those looking to visit one of the 1.3 million Brits who live in Australia. Scrapping the painful duty on those under 12 would be a further welcome development.

But he must go further. Air Passenger Duty isn’t just a significant hit on families, who have already been taxed on their income and will be taxed again on all the accoutrements of a foreign holiday. We estimate that taxpayers coughed up almost £1.9bn in holiday taxes last year, once you add in taxes on items like swimming trunks and the bizarre tax on travel insurance.

Furthermore, it isn’t just a double-tax.

It hits businesses hard, too.

It’s all very well telling entrepreneurs to get out to emerging markets and do their bit to overturn Britain’s worrying trade deficit, but it doesn’t make sense to then tax them if they have the courage to actually make a deal in Beijing, Bogota or Benin. Harassed to join the global race, APD instead handicaps businesses by creating a clear competitive disadvantage for British firms against global competitors.

In making flying cheaper, of course, those firms who travel regularly will find more spare cash kicking around to invest in new projects or employees, or be able to give a slightly higher Christmas bonus. It will benefit airports and airlines, of course; but PwC reckon the abolition of APD could create as many as 60,000 jobs across the supply chain and that “abolition of APD could pay for itself.”

The Treasury has admitted that the tax is purely a revenue-raiser, and that it doesn’t make any significant environmental contribution. So if it doesn’t do any good on that side of the ledger, and raises no additional revenue for the Treasury than its abolition would, there doesn’t seem to be a particularly compelling reason for it to exist.

Brits pay amongst the highest levels of flight duty in the world. It’s time to scrap it.

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