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Budget 2011: Abta regret over per-plane APD U-turn

Abta joined other travel industry bodies and firms in welcoming today’s announced freeze in APD but said it regretted the government back tracking on a manifesto commitment to move to a per-plane form of the tax.

The government has vowed to seek ways of changing international laws to enable the tax to be calculated on a per-plane basis in the future to benefit less polluting carriers and aircraft having conceded it would currently be illegal.

Abta was pleased with the announcement to revise the existing “arbitrary and illogical” banding structure that sees flights to the Caribbean taxed at a higher rate than considerably longer ones to the West coast of the USA.

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.”

Abta said it will seek clarification from the government as to how much of the £2.2 billion it expects to raise when emissions trading starts in the EU next year will come from aviation.

Tanzer added: “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.”

The trade association calculated the freeze in APD this year mean travellers paying £145m less than they would have had without this cut.

However, Abta said this was only a temporary reprieve with an increase planned for April 2012 and the additional costs of emissions trading.

Abta welcomed a commitment to consult on including of private and business jets within APD calling this “an unfair and unjustifiable anomaly”.

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