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Ministers urged to ditch air tax

BA planes on the runway04/02/13

By James Martini

Ministers have been urged to consider ditching the air passenger duty (APD) airport departure tax after a report revealed that it could boost the economy by more than £16 billion in the first three years.

Financial services firm PricewaterhouseCoopers (PwC) claimed that abolishing the tax in the UK would create up to 60,000 extra jobs in the long term.

Four leading airlines agreed that scrapping the tax would encourage them to expand their route networks, increase inbound tourism to the UK and improve global business links.

The report said: "Abolishing APD has the potential to reduce the cost of flying, making it cheaper for businesses to maintain relationships with overseas customers. In this sense APD could be regarded as a tax on exports.

"APD is at least as damaging to the UK economy, and probably more so, than corporation tax or fuel duty."

The APD tax has been in operation for more than two decades, in which time short-haul flights have increased by up to 260 per cent and long-haul flights by 360 per cent.

Tourism to the Caribbean has been one of the hardest hit overseas markets in recent years, with flights to Antigua or Barbados being more heavily taxed than longer trips to the west coast of America.

British Airways, easyJet, Ryanair and Virgin Atlantic all agreed that the report showed the important role being played by the aviation sector, describing it as "an engine of economic growth for both international commerce and tourism" in the UK.

A communal statement from the airline chiefs said: "It proves that APD is one of the three most destructive taxes, alongside corporation tax and fuel duty.

"The Chancellor has taken action on those two taxes in the Autumn Statement and we would encourage him to use the forthcoming Budget to remove APD to stimulate economic growth and create jobs."

Should Chancellor George Osborne respond proactively to the findings, the aviation industry said it would be "able to move quickly to add new flights in and out of the UK, or invest in new products and services, creating new opportunities for businesses and much-needed jobs across the UK".

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