Long haul holiday tax rise

The Government is proposing a 58% tax rise increase in Aviation duty to replace the current APD. This would mean that a British family going on holiday long haul in 2011 could have to pay £250 in extra tax just to leave the country, up from £160 today.

The 58% increase is part of government plans to introduce a new ‘Aviation Duty’ to be levied on every departing plane, to replace the current ‘Air Passenger Duty’ (APD), BATA says.

The government’s consultation on introducing the new duty to be levied on every departing plane ended this week.

Announced by the chancellor Alistair Darling in the Pre Budget Report last year, the new departure tax is expected by the Treasury to raise over £3.5 billion in 2011/12, compared with £971 million for APD in 2006/7

The tax could also offer foreign airlines an advantage. Submitting an industry response to the Treasury consultation, Roger Wiltshire, secretary general of BATA said:

“The introduction of Aviation Duty would subsidise foreign airlines and airports because it would make it cheaper for people to connect to a continental hub such as Paris and fly long-haul from there rather than take a direct long-haul flight from the UK.

“Passengers who choose to make their long-haul journey via an airport in another EU state would benefit from a windfall reduction on duty of 75 per cent. These passengers currently pay £40 long-haul APD whereas in future they would only pay short-haul Aviation Duty of around £10.”

He also said there would be no environmental benefit resulting from the tax.

The government says the tax would be payable per plane rather than per passenger, in order to send better environmental signals and ensure that aviation makes a greater contribution to covering its environmental costs.