Time to end APD?

By | Category: Travel tips & opinions

About a month weeks ago, Just about Travel considered he problems of reducing APD at Welsh airports. Actually this really means just Cardiff as the only other airport – Anglesey – connect just 14,000 passengers to Cardiff each year and even flights to English airports are unlikely.

Goodbye to APD?

In a meeting with the Welsh Affairs Committee early this week, the head of Bristol Airport said that any move to devolve APD to Wales which led to a reduction in APD would give Wales an unfair advantage and could mean that Bristol could lose more than a million passengers a year.

That would amount to about an eighth of all the passengers using that airport. Forget for a moment whether Cardiff could cope with an additional million passengers, the problem for English airports remains if Wales operated differing rates from England. The same applies if rates differed between Scotland and England.

The obvious answer would be to remove APD but name me a government that wants to remove an income stream especially one that produces £ 4 billion for the treasury each year?

The answer is to probably to develop a tax that can replace APD with one that treats all parts of the UK more fairly otherwise a tit-for-tat attitude might prevail with one nation cutting APD below another in order to entice passengers and income to itself.

Since airline tickets are zero rated for VAT, it can be argued that flyers and airlines are treated more leniently than other parts of the tourism industry. For example, is charged for hotel accommodation.

If VAT was charged on airline tickets and APD was abolished then the UK government would probably make more money than at present. As VAT is a UK tax and not a devolved one it would mean that the devolved nations couldn’t use it as a lever to play one part of the UK off against another. It could then also decide to reduce VAT on tourism activities something which other countries do to make the industry more competitive.

Introducing VAT on airfares wouldn’t be acceptable whilst the UK is part of the EU. But as the UK is leaving on March 29th – or some date in the future – the UK could unilaterally introduce VAT on airline tickets. If at the same time it said that the balance of the revenue derived from its introduction which was above the revenue it gained from APD would be split proportionately between the nations (depending on the number of flyers there were from each nation) it might also mean that certain cities would stop pushing for accommodation taxes.

Devolving APD away from Westminster will only cause strife if any nation alters the rate at which APD is charged. The sooner it goes and a fairer replacement is found, the better.

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