Fair Tax on Flying from the UK Government
Friday 4, March 2011
Tourism Industry Unites to call for a Fair Tax on Flying. UK Holidaymakers Pay By Far the Highest Flight Tax in Europe. Two thirds of consumers think that aviation tax is currently too high.
The leading names in the UK travel and tourism industry have today announced they are uniting for the first time behind a campaign calling for a Fair Tax on Flying from the UK Government.
With fuel prices reaching record levels this week, the campaign is calling on the Government to halt any further rises in aviation tax, with revenue from Air Passenger Duty (APD) having increased by 2600% since it was first introduced in 1994. This year £2.2 billion of holidaymakers’ and business travellers’ money will pour into the Treasury’s coffers. The Government has stated that it intends to raise the tax by a further £1.4 billion by 2015.
The campaign is calling on the Government to halt any further rises in aviation tax, with revenue from Air Passenger Duty (APD) having increased by 2600% since it was first introduced in 1994. This year £2.2 billion of holidaymakers’ and business travellers’ money will pour into the Treasury’s coffers. The Government has stated that it intends to raise the tax by a further £1.4 billion by 2015.
In a new survey conducted by ComRes for ABTA, who is spearheading the Fair Tax on Flying campaign, the British public has overwhelmingly indicated that the current level of taxation is “too much”. Almost two thirds of consumers [63%] believe the current level is too high, 21% say it is at about the right level, and only 5% think it is too low¹. Moves to further increase the rate of aviation tax are therefore likely to be met with significant consumer opposition.
In an open letter to the Chancellor, George Osborne, the campaign sets “Five Tests” of fairness for him to take into account as he prepares his March Budget. Today it launches a social media campaign, inviting members of the public to sign up and get behind the call for a Fair Tax on Flying (www.facebook.com/afairtaxonflying).
Holidaymakers or business travellers flying from the UK pay by far the highest levels of flight tax in Europe. Five European countries currently levy versions of an aviation tax but all at significantly lower rates than the UK. For example, a family of four flying from the UK to Florida pay £240 in flight tax while if they fly to Australia they can expect to pay an eye-watering £340. That compares with just £11 for an Irish family flying to the same destinations or £15 for a French family. Even on European flights, UK passengers are being stung: a British family pays twelve times as much in tax as a French family.
Additional research commissioned by ABTA shows that three in four air passengers have no idea how much tax they’re paying.² It is thought this lack of awareness among consumers has left the door open for the Government to introduce successive increases. All APD rates paid by passengers were doubled in 2007, and massive rises hit passengers again in 2009 and 2010.
Also worrying is the impact that the increasing level of aviation tax is having on the UK economy. Since 2007, when the Government began introducing a series of significant hikes in the tax, air passenger numbers from the UK have fallen by 22% from more than 81 million per annum in 2007 to 63 million per annum in 2010. Heathrow Airport, our busiest and main international hub, has fallen from 1st to 5th place in Europe in terms of destinations served in the last twenty years. As visitors to the UK are liable to pay the tax when they fly home it is feared that holidaymakers and business travellers may simply by-pass the UK altogether, an issue of real concern in the run-up to the 2012 Olympics. Governments in Denmark, Sweden, Malta and the Netherlands have all axed their versions of aviation tax after assessing the negative economic impacts on their economies.
Comments from the Industry:
Mark Tanzer, ABTA, Chief Executive:
“When it comes to the future of tourism in the UK, the Government’s words and deeds simply do not match up. The Prime Minister has identified tourism as one of the top five industries to drive growth, yet aviation tax has become a punitive stealth tax. It is vital that the Government understands the impact it is having on the health of the tourism industry in the UK. The industry is willing to pay its way, but a 26-fold increase since 1994 puts the UK at a competitive disadvantage when compared with our European neighbours and punishes UK holidaymakers and business travellers unfairly. Air passenger numbers have decreased by 22% since 2007 when the tax was last increased, and increasing it yet further will cause significant strain on hard-pressed family budgets and hamper the UK economy’s growth.”
Tracey Poggio, A.N.T.O.R., Chairman:
"Under the guise of environmental protection, this tax has accelerated in record time. There still remains no evidence to support its benefit as a green tax. The impact on both the developing and established economies within this global industry, is hitting at a critical time. The British public remain largely unaware of how hard the forward increases will affect them. However, when the pricing hike hits, the Government is effectively penalising Joe Public for choosing to take a holiday abroad."
“We must enhance the UK’s attractiveness overseas by reconsidering future plans around aviation duty, as well as making visa processes more visitor-friendly. It’s essential we don’t price ourselves out of the opportunities for growth afforded by the boom in tourism across China, India and Europe. As well as aviation and travel, a whole host of other jobs across the leisure industry depend on people travelling to the UK, where we currently have the highest aviation taxes in the world. It is vital we look at the bigger picture and take decisive action to help the private sector support our recovery by making Britain a competitive magnet for tourism.”
Mike Carrivick, BAR UK, Chief Executive:
“The Government has one last chance to get aviation taxation right in advance of the EU Emissions Trading Scheme (EU ETS) which comes into effect 01 January 2012.
“Recent changes to APD have imposed massive inflation-busting increases which have placed disproportionate tax burdens on all air travellers. The very real threat of retaining APD in addition to the new EU ETS charges is unjustified and jeopardises growth in various sectors of the UK economy.”
Keith Williams, British Airways, Chief Executive:
“We recognise the exceptional difficulty of the country's fiscal position and we are content to pay our fair share. But the UK airline industry is already the most heavily taxed in the world and any further tax burden will be counterproductive to the country's economic recovery."
Mike Greenacre, The Co-operative Travel, Managing Director:
“APD has already had a significant impact on tourism. A survey of over 30,000 holidays carried out last month by The Co-operative Travel has seen a 17 per cent reduction year-on-year in holidays for destinations that are between 4,000 and 6,000 miles from London, with sales to the Caribbean (down 20 per cent) and India (down 34 per cent) hit particularly hard.
“Our research also shows that consumers will look at alternative airports to fly from to lessen the impact of APD, and this is bound to have a major impact on UK airlines.
“Quite clearly what is required is a far more equitable method of taxation that does not damage the tourism industry and which does not discourage travellers from flying.”
Julie Southern, Virgin Atlantic, Chief Commercial Officer:
"Virgin Atlantic is supporting the Fair Tax on Flying campaign so that the Government can be in no doubt that the industry is united against further increases in Air Passenger Duty. A family of four travelling in Economy with us to Orlando in 2006 paid £80 in APD. Today they have to pay £240. APD is not just a tax on British families, it's a tax on inbound tourism and trade and investment too. It is shocking that the UK has one of the least competitive air taxes in the world. Germany’s new Air Travel Tax has been set at approximately half the level of APD. Everyone knows the Government needs tax revenue. We're simply asking the Government to recognise that our passengers are already paying more than their fair share."
Mary Rance, UKinbound, Chief Executive:
“We feel that it is vital for UKinbound to join forces with colleagues in the inbound and indeed outbound industries to stand united against this damaging tax, which only works to make the UK uncompetitive and unattractive as a destination. It acts directly against the wider objective of making the UK one of the top five tourism countries and is certainly a barrier to growth in inbound tourism, the third largest export industry to the UK. Our contribution to the UK economy could be even greater with a fairer tax on aviation.”
Comments from holidaymakers
Dave and Jodie Mortram, UK passengers traveling from Gloucestershire to Orlando, Florida:
“It’s too much…far, far too much… We’re being taxed on everything we do from the pay packet to the fuel pump… No wonder we’re called Rip Off Britain.”
Bill and Michelle Hayley, UK passengers travelling from Wiltshire to Orlando, Florida:
“It’s an absolute disgrace. We’ve had to travel down in the car, fill up on expensive fuel… The holiday itself was quite expensive. Then we had to add on getting into America… Little add-ons, so that when you first book the holiday it seems quite reasonable and then you have to keep adding on and adding on… It’s basically taken us right to the limit. I don’t know if we’ll be able to afford to go again, if I’m honest… We all have to contribute but it seems that the working class person just has to work and keep giving back and giving back. It’s just getting too much, to be honest.”
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