MPs call on government to cut air travel tax by 50%

Font: BBC

MPs are urging the government to halve air passenger duty in next week's Autumn Statement, saying the tax hampers post-Brexit Britain's ability to trade outside Europe. The British Infrastructure Group (BIG) claims the tax acts directly against a policy of extending UK business links to the "farthest reaches of the globe". The tax is set to rise again in April to £150 for some long-haul flights. In a report, BIG said it should be cut by 50%, then scrapped altogether. Grant Shapps, the former international development minister who leads BIG, said Prime Minister Theresa May needs to make good on a promise she gave on Monday to "forge a bold, new, confident future for ourselves in the world". He said: "Particularly post-Brexit, now is the time to do it." He added that reducing air passenger duty (APD) could provide an immediate "Brexit dividend" because the government would not have to wait until Article 50 is triggered to make the cut. Britain has one of the highest air travel taxes in the world. On economy class flights of over 2,000 miles, passengers pay £73 in tax, which will rise to £75 next year. On long-haul business class journeys, flyers currently pay £146 in duty which will increase to £150 in April. In the report, BIG cites industry figures that show UK APD for non-economy tickets is three times more expensive than France and four times higher than Germany. It notes that Ireland has scrapped APD completely. Also, Scotland is planning to reduce APD by 50% in 2018. "APD has disproportionate effects on different tickets, disadvantaging flights to the Far East and especially to developing economies, where the cost of a plane ticket from London can be well over 10% tax," the report said. "If the government is to act on its commitments, especially those of securing new trading partners outside the EU, it must make it as easy as possible to do business, conduct negotiations and to stimulate the exchange of people and skills. "It cannot continue to actively make extra-European travel more expensive than it needs to be."

Roger Harrabin, BBC environment analyst

Some MPs will strongly resist any attempt to cut aviation taxes. Earlier this week, the Environmental Audit Committee said the Treasury must consider the environmental impacts of its decisions. They are likely to point out that the biggest beneficiaries of a duty cut would be long-haul holiday makers, who might otherwise be spending their money in the UK. Business passenger numbers are stagnant - the growth in demand is for holidays. They will mention that aviation is already uniquely protected from efforts to cut carbon emissions: under the government's plans, emissions from motoring and home heating will have to be cut to accommodate the growth in carbon dioxide from aviation. Critics are also likely to say that families travelling by air pay less tax per mile than car drivers, even though driving a family on holiday causes less pollution than going by plane. They will also question whether £150 tax will really deter a company director who has forked out for a business class seat.

'Stamp his authority'

While the former Chancellor George Osborne exempted children under 16 from APD, the tax has continued to rise for adults. When it was introduced in 1994, the charge was £5 on short-haul flights and £10 on long-haul travel and was expected to generate £330m a year in revenue. APD now generates around an annual £3bn for the government. Mr Shapps argued a sharp drop in tax revenue from implementing a 50% cut would be recovered from increased trade outside Europe. He added that a reduction would allow Philip Hammond to "stamp his own authority" as Chancellor in his first Autumn Statement next Wednesday since being appointed to the role.A Treasury spokesperson said: "We keep all taxes under review, and do not comment on speculation around the Autumn Statement."

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