13 NOVEMBER 2017
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In a little over a week, on 22 November, we in the UK face the thrilling prospect of The Budget, which used to be called the Autumn Statement. Previously The Budget was in the Spring. Confused. And that is just the name as next year we will have the Spring Statement.
Whatever the Chancellor calls his financial considerations it will be preceded by a further round of lobbying aimed at reducing, or preferably abolishing, the travel industry’s most unloved tax, Air Passenger Duty (APD). Will it work this time?
Will a government enmeshed in debates over Brexit and Heathrow expansion, to name but two industry calls on its collective consciousness, be able to see the wood for the trees? Given recent history, BTN somehow doubts it. And ironically, it is the very confusion over Europe and its effect on air travel that makes the prospect of change this time even less likely.
It’s not for want of trying. The industry as a whole has made no secret of its disdain and one of the leading groups against APD, the campaign “A Fair Tax on Flying”, turned out in force in Westminster last Tuesday to press the call for a significant reduction in the levy. It’s not just any group; included were representatives of Airlines UK, the AOA, BAR-UK, ABTA, Virgin Atlantic and American Airlines, all of them backing former minister MP Grant Shapps as he hand-delivered a letter to HM Treasury.
The letter was signed by more than 40 members of the British Infrastructure Group of MPs and peers chaired by Shapps (BTN 2 October). It highlighted the damaging impact of the high level of APD on trade and connectivity and called for a “decisive cut”. Later in the morning, representatives of the campaign delivered a petitioning letter to the door of Number 10, urging the prime minister to act.
The views expressed have been aired before, but BTN is happy to put them forward again as part of the effort to convince ministers it is a serious problem, made worse by the complicated structure of APD and the usual tangle of definitions surrounding any act of Parliament these days.
For now, the Fair Tax group is suggesting it would settle for a reduction, preferably at least 50%, in APD. Even if this is achieved, it will do no more than put the UK on a level playing field with the country with the next highest aviation tax in the EU, which is Germany. Sounds straightforward, but attempts to compare and contrast APD with what happens in other countries are bedevilled by different rules and interpretations.
France for example has a Civil Aviation Tax, the taxe de l'aviation civile, or TAC. It applies to all commercial flights departing from an airport situated on French territory including overseas departments. It is per passenger and the rate depends on the passenger's final destination. That for flights to destinations in the European Economic Area and Switzerland is currently €4.44, and to all other destinations €8.00 – far below the UK rate.
In Scotland, plans to replace APD with a new and cheaper Air Departure Tax (ADT) from next April have been delayed after the Scottish government said plans to continue exempting journeys from airports in the Highlands and Islands meant it needed to obtain EU approval under state aid rules. Observers have since noted that getting this approval could take longer than Brexit. EU rules mean that a day air return trip between London and Edinburgh costs 2 x £13, but London and Amsterdam £13. With a 2,000 mile cut off flights to Tel Aviv and the Egyptian resorts attract £75 tax, whilst the Canaries, just a little less £13 is the charge.
Shapps makes the point: “As it stands, APD is acting as a ‘tax on trade’, with the UK having the highest level of air passenger taxes in the world. Only aviation can connect the UK to the emerging markets that are seen as vital to our continued post-Brexit prosperity. If the government is to act on its commitments, especially around securing new trading partners outside the EU, it must make it as easy as possible to do business. Our current high levels of APD place these commitments at risk. We urge the Chancellor to cut APD to show Britain is open for business, boost tourism and reduce the cost of holidays for hard-pressed families.”
All comments are filtered to exclude any excesses but the Editor does not have to agree with what is being said. 100 words maximum
David Bentley, Manchester/UK
Frankly, if keeping the APD meant that Hammond didn't reduce the VAT turnover limited I'd be more than happy though of course it won't be that simple.