The bosses of four leading airlines have urged the government to halt the latest rise in Air Passenger Duty as part of a wider taxation review.
APD rose again yesterday (Sunday) by double the rate of inflation with further increases expected to increase revenue from the flight tax by 46% by 2016.
Chief executives from easyJet, British Airways parent company IAG, Ryanair and Virgin Atlantic welcomed the Chancellor George Osborne’s commitment made last week to the Treasury Select Committee to change the way the Treasury measures the impact of taxation on the economy.
Carolyn McCall, Willie Walsh, Michael O’Leary and Steve Ridgway jointly called for an examination of the impact of APD to be a priority in the new approach.
They said yesterday: “APD rises again on April Fool’s Day but the public should not be fooled again by this tax and the damage it does to them, to jobs and to the wider economy.
“We urge George Osborne to make APD the first tax to be examined under the Treasury’s new review of the wider impacts of taxation on the economy and to halt the proposed rise in APD to £500 for a family of four until this review is complete.”
The airlines say the increases would mean a family of four paying tax of £440 to fly economy class to the Caribbean and £500 to Australia. A family of four travelling to any long-haul destination would have paid just £80 in 2005.
A family of four in Scotland or Northern Ireland flying to see friends or relatives in England three times a year would have an APD bill of £420. In 2005, it would have been £120.
Including a £78 visa charge, each Chinese business traveller pays nearly £250 to the Government before they’ve even arrived in Britain – which puts the UK at a disadvantage compared with Germany and France’s more competitive tax and visa regimes, the airlines argue.
Economic secretary to the Treasury Chloe Smith defended the rise, which comes after APD was frozen last year. “Most passengers pay only a pound more on their flights as a result of the rise,” she told the BBC. “We have made aviation tax fairer by bringing private business jets in for the first time.
“We were able to take action to freeze APD last year and we have been able to be clear about what will then happen to it this year – I think that does represent a fair deal for passengers and I think it does also represent a fair deal for businesses, who are today enjoying a historically low rate of corporation tax,” she said.
Tax on short-haul economy flights has gone up from £12 to £13 as part of the four bands of APD.
Flights up to 4,000 miles have seen an increase from £60 to £65, while tax on flights between 4,000 and 6,000 miles has risen from £75 to £81. APD on flights above 6,000 miles has gone up from £85 to £92.