In a few weeks' time the Chancellor is likely to confirm that next year he will introduce a double-inflation rise in Air Passenger Duty (APD) - the tax levied on all flights in and out of the UK. However, a new poll of MPs published today by ABTA as part of the Fair Tax on Flying campaign demonstrates for the first time, the overwhelming concern in Parliament about the planned increase. With just weeks to go before the Government makes up its mind, it is clear that the case for a rise simply doesn't stack up.
Air Passenger Duty is a poorly understood tax. Research conducted last year found that just one in three passengers look at the proportion of tax they pay on flights. If more passengers did, they might be in for a surprise. People flying from the UK pay the highest rates of aviation tax in Europe.
Even before the Government's planned increase next year, a typical British family of four travelling in economy class pays £240 more than most European countries to fly to the USA and almost £50 more to fly within Europe. In fact, we're one of only five countries in Europe that levy the tax. Denmark, Norway, Malta and Holland have all scrapped similar taxes. The planned APD increase next year is particularly significant because it will coincide with the aviation sector's entry into the Emissions Trading Scheme (ETS) - adding an additional cost to the price of flying.
Some key destinations are already suffering. Figures from the Office of National Statistics show a decline in visits from the UK to Europe, falling by 3.4 million visits (7.4 per cent) from 45.9 million in 2009 to 42.6 million in 2010. So it's no wonder that today's political survey demonstrates for the first time, overwhelming concern about the impact of additional flight tax increases.
Three out of every four MPs now say they are concerned that 'further rises in aviation taxation may price some people out of flying' - almost double the amount of MPs (39%) when asked the same question a year ago. Another increase will only serve to price people out of the air - and it will be ordinary families who will suffer disproportionately.
Now let's be clear: no one would credibly argue that aviation shouldn't pay its fair share in tax. Passengers should rightly cover the environmental costs associated with air travel. But the correlation between air taxes and the carbon emissions associated with flying disappeared long ago. The Government's own research found that the environmental costs of flying per passenger were around £3.30 on short haul scheduled flights. The APD on flights to most destinations in Europe (the lowest band of APD) is currently set at £12 for an economy flight. Go slightly further afield and it rises to £60.
Previous Governments sometimes disingenuously claimed that aviation tax was a green tax, but the current Coalition Government has made it clear that it is simply a revenue raising exercise. Yet, perversely a further rise in APD is likely to have exactly the opposite effect - actually reducing revenue to the Treasury. Increased levels of APD resulted in a fall in passenger numbers as early as 2008, and was then exacerbated further by the economic downturn. Successive pieces of research suggest that next year's planned rise will hit passenger numbers even further - with as many as 2.7 million fewer leisure passengers boarding flights in the first year. Inevitably, it will be the least well off who will have to forsake foreign travel if the rise goes ahead.
Higher flight taxes do not just affect British families travelling abroad on their holidays; they also make it harder to attract tourists from overseas and make the UK a less attractive place to do business. At a time when the economy needs more visitors from abroad it seems perverse to make it more expensive for people to visit the UK. It costs a family of four from Australia £325 more to visit London than holiday in Paris, in flight taxes alone. This puts Britain at a competitive disadvantage compared with our European neighbours. Stopping the inflation-busting rises is clearly the immediate priority but even without the planned increases Brits will still pay the highest flight taxes in the world.
So, MPs are right to be worried. They might not all stick their head above the parapet in the way that London Mayor Boris Johnson did recently when he described aviation tax as the "bourgeois repression of people's ability to take holidays". But today's survey illustrates their concerns loud and clear. I hope the Chancellor listens to them as he writes his fiscal plans for the coming year.