13 JULY 2009

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Article from BTNews 13 JULY 2009

COMMENT: Stealth tax increase

British citizens are about to be saddled with a nearly 8% rise in passport issue charges, yet another stealth tax increase announced last week.  This is the third major duty rise to hit the travel industry in less than one year as the government seemingly tries to destroy one of the UK's vital industries.  As unemployment rises, inflation hits a new low and investors’ income from loans to banks impinge on the incredulous it seems that the Chancellor, a previous and likeable Minister for Transport when times were good, is biting back, forgetting that the air transport industry is crucial to the well-being of the nation.

The increase in passport charges over the next 18 months will be followed by the most massive hike in APD (Air Passenger Duty) ever thought up by civil servants seemingly clueless regarding the workings of air transport.  Naturally HM Revenue and Customs have issued a document (HMRC Reference:Notice 550) but it would take a long haul flight to have the time to read it and for the details to sink in.  How the department will police the regulations is very questionable.

The APD increase will hit everyone.  Those who depart, those who arrive, and even some of those who want to pass through.  Amsterdam, Frankfurt and Paris cannot believe their luck.

As for visas, South Africans wanting to visit the UK on holiday now have to pay, joining an ever-growing list of countries whose citizens are seemingly made less than welcome.  The Foreign Office does have an argument regarding the monitoring of our borders but a felon is just as likely to have a visa.

It was not by magic that Heathrow grew to be the hub of the world’s airline industry.  It was by the foresight of a few.  And we are losing one of those – Sir Michael Bishop – who last week stepped down as Chairman from an airline he created, bmi, the one-time British Midland Airways.  Sir Michael fought and mostly won his battles including “Open Skies”.

Presumably with time on his hands Sir Michael could fight the stealth tax war, and win.  We need a leader who represents a nation that flies and is not seen to represent any one faction.  Please have a think about it Sir Michael.

The passport increase will take effect from 3 September.  Busy travellers who want a same day service and the large 48-page edition will have to pay £138.50.  Do make sure that the required photograph is taken without glasses on.  If you are personally attending a passport office ensure you have the proper paperwork.  Another booking has to be made which can be days away.  It can be very frustrating.

The Home Office notes in a press release that the decision to increase fees follows “a decline in passport applications experienced during these difficult economic times,” more or less saying that it is a commercial organisation and not a government department.  It adds that the rise would ensure the Identity and Passport Service (IPS – yet another costly rebranding of a government department that has existed since the First World War) is able to continue to deliver “the service its customers have come to expect,” and “the security enhancements to passports to which it is committed.”  Pure waffle.  Someone has not read the master book on economic theories.

There is some good news if you were born on or before 2 September 1929.  Your new passport (or renewal) is free.  Even here the government is being less than generous.  Why not allow everyone over 80 to travel abroad courtesy of the government.  It might bring in a few votes.

Britain is a business.  Air travel is part of this business.  Everyone is cutting their cloth to fit the harsh economic times.  The passport cost hike should be postponed and the visa situation reviewed.  As for APD it was always a stealth tax explained away in pure spin.

Lord Adonis, the latest Minister for Transport, appears before the industry at London’s Aviation Club in September.  He is likely to be in for a hot time.  And the retort “more tax is nothing to do with me, it is the Chancellor,” will not do.  They are both members of the Cabinet.

Malcolm Ginsberg

Editor in Chief

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