Remove APD to stimulate economic growth

By | Category: Travel rumblings

The battery of invective directed at the government over the high rate in taxes that air passengers pay has continued today with a statement from leading British airlines.

annoyed and moaning

© Dan Sperrin

First there was a report from the accountancy giants, PWC, that bemoaned the high levels at which APD has charged and now comes a huge 571 page report from the World Economic Forum pointing out that we pay more than any of 140 countries in the world bar one. Yes our tax is the 139th highest in the world.
So Willie Walsh from the parent company of British Airways, Carolyn McCall from easyJet, ( whose company has just joined the elite FTSE 100) Ryanair’s Michael O’Leary and Craig Kreeger at Virgin Atlantic have jointly issued a press release lamenting the “destructive” tax and calling for its removal. There is nothing here that they haven’t said before but coming just ten days or so before the budget and a few weeks before APD is due to rise again, they are obviously hoping that the Chancellor might take some notice of them.
But whilst they are correct in reporting what the Forum has said about the tax they fail to mention in their press statement what else the authors of the report say. We rank at number 5 overall in Europe beaten only by Switzerland, Germany, Austria and Spain. We score well in our offerings to attract visitors such as culture heritage and we have a good infrastructure to move people about. Apart from tax we fare well in comparison to the world.
And there lies the problem faced by this gang of four. Numbers of people flying may be dropping slightly but the Jubilee and the Olympics proved strong draws. From APD the chancellor does make close on £2.8 billion pa. Strong arguments are needed to persuade him to drop it. And there need to be fewer headline reasons to visit the UK so in 2013 there may be a slump as there are no Olympics and no jubilee, no royal wedding and no other major sporting attractions. In addition fares from neighboring countries like Netherlands and France, Germany and Sain need to be lowere so that the effect of the tax can be seen. But there’s a problem. Fares in those countries aren’t lower; sometimes they are higher.
The gang at least can call upon the PWC report which suggests that £16 billion over 3 years could be generated if the tax was removed. That would comfortably outweigh the £8.4 billion the tax is expected to generate. But will the chancellor listen? I suspect he won’t and the gang will need to see a bigger reduction in visitors before the treasury gets panicky and changes tack.
And we passengers will continue to pay these outrageous sums.

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