THE BLOG
22/10/2013 09:57 BST | Updated 21/12/2013 05:12 GMT

Campaign Pressure and Irish Abolition Prompts APD Showdown in Commons

This week there will be two debates in the House of Commons on an issue that the Government has been doing its best to bury - Air Passenger Duty (APD). It's often cited that the UK has the world's highest air passenger tax anywhere in the world, and over the next few days MPs will, once again, be debating just how much of an impact it is having on the economy and on ordinary people's ability to travel.

This week there will be two debates in the House of Commons on an issue that the Government has been doing its best to bury - Air Passenger Duty (APD). It's often cited that the UK has the world's highest air passenger tax anywhere in the world, and over the next few days MPs will, once again, be debating just how much of an impact it is having on the economy and on ordinary people's ability to travel.

Last week two things happened which may have a bearing on the long-term future of APD, at least in its current form. Firstly, the Republic of Ireland abolished its version of APD in its annual budget. The Air Travel Tax had been reduced to a flat rate of €3 in 2011 from €10 Euros, making it an extraordinary 30 times lower than UK's APD on economy long-haul flights. However, it was still deemed to be too high, and thus will be reduced to 0 in April 2014.

Secondly, the Chancellor and Mayor of London took a trip to China. Recognising the importance of trade and inbound tourism from the country, the Chancellor announced the reform of one of the two key barriers to international visitors to the UK: visas, the other being APD. Indeed, earlier this year a study by the Tourism Alliance quantified the combined impact of visas and APD on inbound tourism. They concluded that it would contribute to the UK missing the Government target of attracting 500,000 Chinese visitors a year by 2015 by more than a third. If this ambitious target is ever to be achieved the Government must address the whole issue, not just visas: reforming APD to lower the barriers to inbound Chinese visitors (a huge and growing market) and reaping the economic rewards they bring.

What's more, the UK is bucking the trend of many of our European neighbours that can see the damaging impact of air passenger tax on economic growth. Already Holland, Denmark, Norway and Malta have abolished their version of the tax, with Germany freezing theirs earlier this year after a Government review showed it was greatly harming their aviation industry. Yet still the Treasury swims against the tide, refusing to acknowledge the wealth of evidence that this week has caused Ireland to become the latest country to abolish its duty.

So, MPs have two opportunities this week to debate APD, with an Opposition Day debate scheduled by the DUP this Wednesday with a further debate on aviation strategy scheduled for the afternoon of the 24th October. It will be the first test on APD for the new Treasury and Transport teams since the recent reshuffle. It will be interesting to hear what the new shadow Secretary of State for Transport, Mary Creagh MP has to say on APD, particularly in light of the fact that it's her Labour colleague, Louise Ellman MP who has been awarded the debate on Thursday, and whose Transport Select Committee has already recommended a Treasury review of the duty.

Reform of APD continues to garner widespread support from across the political spectrum, with over 100 MPs now backing calls for a Treasury review of the tax. I would encourage all MPs who care about APD to make representations and ensure the Government hears the message loud and clear: we need a macro-economic review of APD at the earliest opportunity.