APD, VAT and a Westminster debate

By | Category: Travel news

APD affects incoming visitors not just outgoing ones

This week there was a debate in Westminster on the impact of APD (air passenger duty) throughout the UK.

John Howell MP reminded other MP’s that the tax was originally an environmental tax to deter us from flying. Whether that is true or just what we were told at the time  is a moot point but patently, as Gavin Robinson MP said, it hasn’t worked! What Mr Robinson did claim was that APD works as “an economic detriment to our country, our economy and our tourism industry.”

As part of the agreement between the Democratic Unionist Party in Northern Ireland and Government last year, a review of air passenger duty and of VAT on tourism and the hospitality sector would take place. That consultation period ended on June 5th but there is no date for a government response other than to say October or November.

As Mr Robinson said, “…whenever we stand before a Treasury Minister or try to argue with the Treasury and say, “We want to have this cut for a boost,” they look at you and say, “This will cost us money. If we take from this pot, how will we supplement it in another way?” The call for evidence will show, as every economic forecast has shown, that there is a net economic benefit to the reduction of air passenger duty. “

The Treasury always seems to follow the policy that they know that this money comes in from APD but don’t believe that the forecasting of the benefits is what will really happen despite evidence from the Netherlands and Ireland that it will.

He also pointed out that after Dublin scrapped APD, the number of air passengers going through Dublin’s airports rose by 47%. In the UK it is 22%. David Simpson MP claimed that “within five years it is reckoned that Dublin airport will be a strong competitor of Gatwick. At one point that was unimaginable, and it is simply because of APD.”

Drew Hendry MP said the Scottish Government remained committed to a 50% reduction in, what is called in Scotland, ADT by the end of 2021 and eventually abolish it.

The debate ended when the Exchequer Secretary, Robert Jenrick, replied for the government largely saying what the government has said before. Oddly enough he didn’t point out that whilst we don’t offer VAT reductions to  tourist businesses, neither do we impose bed taxes as some other destinations do. What he did suggest was that, because of the billions that APD brings in, the government is going to have to see some substantial reasons why it should kill the APD goose which lays so much Treasury gold.

Only nine MP’s spoke and five of those were from the DUP in Northern Ireland where competition from Dublin has meant that Northern Irish MP’s are more aware than some of the influence of APD. There was no speaker from the Liberals or Plaid Cymru and just one from the SNP. Just two Labour MP’s and two Conservatives spoke making a total of 10 people on a topic that supposedly is so contentious.

Was the debate worth the time. personally my answer is no. It would be better left to when the government produces its thoughts in the autumn

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