The Blog

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Simon Buck Headshot

A Fair Tax for Flying

Posted: Updated:
Print Article

With the party conference season in full swing, it seems - perhaps predictably - that policy is losing the war for column inches to tittle-tattle about who said what to a police officer while riding a bike in Downing Street, and whether Nick Clegg really is the best Lib Dem leader the party has ever had. But I hope, when the media descends on the ICC in Birmingham, they pay close attention to the speech which all of us in the aviation sector are interested in: the first conference address from the new Secretary of State for Transport, Patrick McLoughlin.

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.