2013-05-25T11:01:13-04:00 Simon Buck http://www.huffingtonpost.co.uk/author/index.php?author=simon-buck Copyright 2008, HuffingtonPost.com, Inc. HuffingtonPost Blogger Feed for Simon Buck Good old fashioned elbow grease. tag:www.huffingtonpost.com,2013:/theblog//3.2915803 2013-03-20T19:17:00-04:00 2013-05-20T05:12:02-04:00

Simon Buck http://www.huffingtonpost.com/simon-buck/
Of course you'd expect someone who represents the UK's airlines to oppose today's rises. However, opposition to APD goes much wider than just the aviation industry. In the last eight months 100 MPs have called on the Chancellor to undertake a Treasury-led review of APD, backed by many of the Chancellor's own Conservative backbenchers. It's incredibly disappointing that he has refused to listen to them. Last month the chairman of the Conservative's influential 1922 Committee went as far as to call for the abolition of APD.

So what is the new evidence that points to the need for urgent Government action on APD? The PwC's review published in February outlined significant economic benefits to abolition. It is estimated that almost 60,000 jobs could be created between now and 2020, and according to the report, would most likely lead to a net revenue gain for the Government, raising a £500 million in extra tax receipts in each of the first two fiscal years. This month, the World Economic Forum (WEF) report found that the UK is now officially one of the world's least competitive countries when it comes to the ticket taxes levied on passengers. The report ranks the UK 139 out of 140 countries for flight tax competitiveness based on 'ticket taxes and airport charges'. MPs Brian Donohoe and Paul Goggins penned an interesting joint article on this last week.

Yesterday's decision cements the UK's APD in pole position as the country with the world's highest air passenger tax. We've already seen the commercial damage this has done to the aviation industry: Air Asia X ceased their route from Gatwick to Kuala Lumpur specifically because of the rising levels of APD, and Southampton, Glasgow Prestwick and Bristol Airports are just among the many which have lost routes because of the high level at which the tax is levied.

With such a significant and direct impact on the sector, the apparent intransigence of the Department for Transport is almost as disappointing as today's APD rises. Last month, the Secretary of State for Transport Patrick McLoughlin MP said "it's not something I'm going to express a view on": I for one hope his department does take a view on APD given the evident damage it is having on the transport sector, not to mention the wider economy.

Businesses, airlines and ordinary passengers will continue to suffer when the new rises come into force on April 1st. Surely, the Chancellor cannot continue to ignore the overwhelming evidence about the damage this tax is doing? I urge the Government to look at the new evidence, listen to the hundreds of thousands of people who have contacted both the Government and MPs on the issue and take action. The status quo of year-on-year rises is not sustainable.]]> tag:www.huffingtonpost.com,2012:/theblog//3.1935915 2012-10-03T11:31:35-04:00 2012-12-03T05:12:02-05:00

Simon Buck http://www.huffingtonpost.com/simon-buck/
With the issue of aviation capacity heating up, and the reshuffle indicating a possible shift in approach to a third runway at Heathrow, it will be interesting to see what could be an alternative take on the long-term prospects for UK aviation, and its relation to wider economic growth. Although unlikely, given recent responses from the Treasury, there is one area of aviation policy that I particularly hope also gets a mention: Air Passenger Duty (APD). APD is the air passenger ticket tax applied on domestic and international flights leaving UK airports. Originally introduced in 1994 as a small additional revenue-raiser, it soon metamorphosed into an environmental tax under Labour. But again, effortlessly shape-shifting, the Coalition has said that it is in fact a pure revenue-raiser. Of this there is no doubt: it brought in £2.6bn last year alone - and is set to rise to £3.9bn by the end of this parliament.

Every industry in every sector has of course to pay its way, and the aviation industry, is no different. But the industry is expected to pay £2.9bn in tax this year on top of the £7 billion or so it pays in direct taxes, social security payments and Corporation tax, while supporting 921,000 jobs. I don't want to use this opportunity, however, to discuss the comparative levels of taxation and subsidies across sectors, the public transport sector in particular (actually the airline industry fares pretty badly in this context - we don't rely on a Government subsidy for example), but I do want to express my concern about the current levels of a tax which I believe is having, and will continue to have, a seriously damaging impact on the wider UK economy as a whole.

The UK's APD currently stands as the highest aviation tax in the world. So high, in fact, that we are paying up to 400% more in air passenger tax than most countries in Europe. If I can give you just one example, it currently costs a family of four travelling on a round trip from China to the UK £324 in APD. The same journey to France and Germany costs just £36 and £132 respectively, in aviation taxes. In my opinion, this acts as a deterrent, not just for travellers looking to visit the UK, but also for inward investment from overseas businesses. Research by The World Travel and Tourism Council estimates that the UK's APD is preventing the creation of up to 91,000 jobs at a time when we most need them, and is costing £4.2 billion in additional revenue in 2012 alone - a much greater benefit than the annual revenue it raises for the Treasury. The longer-term effects on connectivity and competitiveness could be even more serious, as the inbound tourism and investment that we lose out on, heads to our European rivals. Once business is lost, it is very hard to get it back.

These are all problems that have been communicated to MPs, following a recent summer initiative by campaign group A Fair Tax on Flying, in which over 275,000 constituents and non-UK residents have emailed their MP and the Treasury, expressing concerns about APD and the need for a review into its wider economic impact. The new Transport Secretary himself has received close to 200 emails. With the Autumn Statement coming up in early December, slightly later than usual, it's important that the Government sets out a strategy that will drive growth in our flagging economy in the short and long-term. I believe a re-assessment of Air Passenger Duty is crucial, as not only will it highlight the negative economic effects of the highest air passenger tax in the world, it will also show that the powers-that-be are willing to consider a variety of policy options to push the UK forward. When Patrick McLoughlin steps up to the platform, I'd like to hear him say what hundreds of thousands of people have asked their MPs this summer: that he too supports our calls for a Treasury review.]]> tag:www.huffingtonpost.com,2011:/theblog//3.1066854 2011-10-31T19:00:00-04:00 2011-12-31T05:12:01-05:00

Simon Buck http://www.huffingtonpost.com/simon-buck/
But the Europeans have by no means got everything wrong. It would be tempting - as the UK embarks on a rapid retrenchment of public spending - to imagine that it is the profligate Club Med countries who should be taking a lead from us in all matters of fiscal discipline. While on the macro arguments of the day that may be true, there are one or two isolated (but significant) areas where European nations - almost unilaterally - have adopted taxation policies which stand firmly at odds with their high tax heritage. The consequence of which has been to stimulate growth and investment in those countries. One such area is tax on aviation.

Britain has the highest air ticket tax - known as Air Passenger Duty (APD) - of any country in the world. As an island nation, you can see why successive policy-makers have raised APD since its introduction in 1994. Most Brits have little choice but to pay the departure tax - and it's been a boon to the Treasury. This year it will rake-in an anticipated £2.9 bn.

European countries on the Continent however - willingly or not - have been forced by the laws of free-market economics to keep aviation taxes down, or in the vast majority of countries not levy them at all. European holiday-makers and business people in the Schengen Area have long known they can skip across a border to a neighbouring country to take a flight, instead of paying high air taxes in their home country. The consequence is that just six (including the UK) EU countries levy flight taxes. The Netherlands recognised the economic damage it was doing in 2009 and scrapped theirs.

I accept that the UK is different. The Treasury have, until recently, been able to tax outbound flights knowing full well that holiday-makers would put up and shut up. But that is changing. The economic downturn combined with the emergence of online comparison sites has helped precipitate a new phenomenon - of people flying long-haul (they pay the highest aviation taxes) hopping across from the UK to Paris Charles de Gaulle or Schipol to catch connections for long-haul flights. Indeed, for those living in the north of England, for example, it may be just as convenient (let alone cheaper) to fly to Schipol as it is getting to Heathrow or Gatwick. It means a family of four flying to the USA save around £200 - not an insignificant sum on an annual getaway.

That's not all. The effect of our high APD, combined with the high cost of obtaining visas for non-EU citizens is having another dramatic impact: we're missing out on the burgeoning Chinese tourist market. Last year 3m Chinese tourists came to Europe. Just 127,000 of them visited the UK. The reason? A family of four will pay £600 more than most other EU countries to visit the UK. Many Chinese tourists travel in package tours with stop-offs at a number of European destinations, so Chinese tour operators are now cutting out the UK to reduce costs for their travellers. We're losing out on a huge growth market at a time when the British economy would benefit immeasurably from the inbound investment tourism brings. It is for this reason that the World Economic Forum's 2011 study on international competitiveness ranked Britain 134th out of 138 countries in terms of taxation on tourists.

As the Chancellor weighs up his plans for the Autumn Statement on 29 November, we all recognise the priority the Government is giving to reducing the public debt and it would be unrealistic for the travel industry to be seeking a cut in APD at the current time [except to offset ETS which is what aviation wants and HMT have hinted at]. Similarly, it is also right that aviation should be covering its environmental costs - something that APD, by most estimates, serves to do by a factor of two. But three out of four foreign tourists come to the UK by air and total numbers of visits to Britain have fallen by two million in the last five years. The APD tax yield - forecast at around £15 billion over the next five years - is now so high that it exceeds the tax take from the Bank Levy.

If the tourism industry - the UK's third largest export earner - is to play its part in rebalancing the British economy, the Chancellor would do well to look to the example of our near European neighbours. When it comes to APD at least you have to look to the Continent to find policies that encourage growth and attract inward investment.]]>