Holiday Tax bill rises to £2.4 billion

June 22, 2015 11:26 AM

New research from the TaxPayers' Alliance shows that punishingly high taxes on holiday items, insurance and flights have forced up the cost of a holiday abroad by £62 on every holidaymaker in Britain.

The TaxPayers' Alliance has collated the cost of VAT on "holiday goods" such as sun tan lotion and a hair cut, the Insurance Premium Tax, and Air Passenger Duty - the second highest tax on flying in the developed world. Due to increases in VAT and Air Passenger Duty, the overall figure has increased from our 2008 estimate of nearly £1.5 billion to nearly £2.4 billion this year.

At the extreme end, a family of four travelling to Florida this summer will face an average tax bill of £384 on their flights and holiday purchases in the UK, an increase of £198 since 2008. A family of six travelling to Spain will be hit by an average tax bill of £195 just for going on holiday.

See here for the full research note

Too-high taxes on flying don't just hit families but the economy at large, as seen by the desire of regional governments and assemblies for Air Passenger Duty to be devolved. The government in Holyrood currently plans to reduce APD by 50 per cent, and there have also been calls in the Welsh Assembly for control over APD. Politicians in Northern Ireland successfully lobbied the Treasury to cut rates on flights from Northern Ireland after Continental Airlines announced it would be discontinuing its Belfast to Newark route due to the tax. 

A 2015 PWC report suggested that abolition of Air Passenger Duty across the UK could create as many as 61,000 jobs as airport traffic picks up as a result and, through increased traffic, pay for itself. Further, the Treasury has already admitted that APD is "primarily a revenue raising duty," rather than an environmental policy measure.
Jonathan Isaby, Chief Executive of the TaxPayers' Alliance, said:
"It's wrong that a week in the sun comes with such a huge tax bill, as the taxman chases holidaymakers all the way to the departure gate. These taxes are not only too high but hit those on lower incomes the hardest, making it more difficult for hard-working people to get away for a well-deserved break during the summer holidays. 
"The benefits of lower Air Passenger Duty have been noted by politicians in Stormont, Holyrood and Cardiff. It is time for politicians in Westminster to reach the same conclusion."

Note: Homepage image via Kuster & Wildhaber Photography

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