Travel industry efforts to prevent a further hike in Air Passenger Duty look to have been dashed if a new report proves accurate.
Chancellor George Osborne is expected to raise the flight tax in next week’s Budget and impose new taxation on private jets, the London Evening Standard claimed in an exclusive report last night.
The tax raid could add hundreds of pounds to the cost of travelling abroad for families and businesses. It will be the fourth rise in APD in three years. Osborne is set to widen the net of APD in Wednesday’s Budget so that corporate and private jets are liable to pay the tax.
Although APD was initially presented as an environmental measure, aircraft with a take-off weight under 10 tonnes or fewer than 20 passenger seats are currently exempt. The Government wants to close that loophole to raise millions more in revenues, according to the newspaper.
Abta is leading an industry-wide campaign calling for a “A Fair Tax on Flying” in the face of the coalition trying to raise funds to reduce the national deficit. Airlines warn that higher duty would cripple the aviation industry and hold back economic recovery.
Luke Pollard, head of public affairs at Abta, said: “At a time of squeezed incomes plans to raise APD would hit not only the holiday maker but Britain’s international competitiveness too. The Government talks about an export-led recovery but higher air taxes makes British businesses less competitive and puts international tourists off from visiting Britain.”
British travellers already pay by far the highest travel taxes in Europe. A family of four pays £240 duty to fly to Florida, or £340 to Australia. By contrast, an Irish family would pay £11 in tax to fly to the same countries, and the French would pay £15.
The Government will recoup about £2.9 billion from APD this year, rising to £3.8 billion by 2015/16, according to the Office of Budget Responsibility.
The fair tax coalition argues lower aviation taxes could aid the UK’s economic recovery and has urged the UK government to follow the example of other countries, like Ireland, that have reduced their taxes to stimukate growth.
Yesterday Greece suspended some of its airport fees to stimulate its stricken economy and this week cruise opertor Fred Olsen Cruise Lines ended its winter Caribbean cruising programme partly blaming APD.
The tax was described as discriminatory this week by the Caribbean Tourism Organisation as it lobbied Brussells. The region is particularly hit by a banding structure that sees visitors pay more than those visiting the US and even Hawaii. This banding system could be midified in the Budget, observers said.