For many ordinary working families, the ability to take a holiday abroad has become a powerful symbol of increased national prosperity and of a more equal society. No longer is international travel the preserve of a ‘Whicker’s World’ jet set: whether it’s a long-haul trip to Disney or a short hop to a sunny beach, over the last 30 years it has become less a luxury and more an expectation. For many, the ability to take the family away for a decent holiday is the thing that motivates them to work hard for the rest of the year.
As the rising cost of living has started to bite, people have traded long-haul for short or moved to low-cost airlines, but the next turn of the screw will price huge numbers of people out of the market altogether. The reason is simple: not only do Brits already pay among the highest aviation taxes in the world, but there are even more penal charges planned.
- A family of four flying economy class from the UK to the United States pays £240 (double for premium economy) in APD tax, whilst Germany’s equivalent tax is £40 and France only £14.50.
- In the last four years, APD tax has increased 140% for short haul flights to Europe and 325% for long haul destinations; and next year, the Treasury is looking to increase APD by ‘double inflation’.
- The UK has some of the highest aviation taxes in the world, and by far the highest rates in Europe, on average 8.5 times higher at the standard rate than our nearest competitor, Germany.
- Holland, Denmark, Belgium and Malta have already got rid of APD altogether; whilst Ireland is phasing it out currently and Germany is likely to kill it off soon.
- UK airports are losing airline business to overseas European competitors, directly due to their lower government taxes on flying? For example in my own part of the country, Manchester Airport lost a new Air Asia X route, which decided to fly a new regular European service to Paris instead because of the high UK APD rates.
- 2012 will see UK aviation’s entry into the EU Emissions Trading Scheme, meaning that without a commensurate reduction in APD, air passengers will effectively be ‘double taxed’ from next January.
Taken together, all this means flying is reaching a tipping point – in the last four years APD has shot up, passenger numbers have declined from 240 to 210 million; and we face two more tax hikes in 2012. We need to act to keep flying affordable for the many and to help our world-class aviation sector – and UK plc, which relies on aviation for the critical transport infrastructure it provides – grow sustainably in future.
Three aviation trade associations, and their airport and airline members, are today kick-starting what will be eight months of cross-industry activity ahead of next year’s Budget, to lobby the Chancellor on APD tax. They are using the summer holiday season, when airports and airlines are busy with sun-seekers, to draw attention to the eye-wateringly high levels of taxes we all pay when we go away; and they are looking for a commitment to keep holidays affordable instead of next year’s planned tax rises. The campaign is called “Hands off our holiday, Mr Taxman!” – see www.handsoffourholiday.com.
The trade associations – the Airport Operators Association, Board of Airline Representatives UK and British Air Travel Association – are asking constituents to write to their MP about the issue, and also for MPs to lobby the Chancellor, to ward off next year’s APD increases. As a Manchester MP, I am acutely aware of the importance of Manchester Airport to the jobs and prosperity of my constituents and indeed the whole North West (and beyond), so I, along with other colleagues in the Conservative party and across Parliament, will be encouraging the Treasury to seek a better balance, as they put together their tax plans later in the year.
George Osborne has already shown greater sensitivity to the danger that APD poses to British competitiveness. Earlier this year, the Fair Tax on Flying coalition generated media coverage and a high profile open letter to the Chancellor – and a planned inflationary increase in APD was scrapped.
We shouldn’t forget that APD started as just a £5 surcharge when Ken Clarke first introduced it in 1993 supposedly as an environmental measure – it was never supposed to be a revenue-raiser, and next year’s entry into Emissions Trading means there is even less reason for this unfair tax. Furthermore, what better way to stimulate economic activity, boost tax revenues and help reduce the deficit than making it easier for inbound tourists to come to the UK and spend money in our shops, restaurants, hotels and on leisure activities? And what kind of signal does it send out when overseas visitors come to the UK next year for the Olympic Games and the Queen’s Diamond Jubilee only to be told they will have to pay a fortune to leave the country afterwards? They might think twice about coming back…
Fairer taxes on flying help passengers go on holiday, as well as sending a signal that Britain is open for business. They would also enable many of us to visit friends and relatives in the UK and around the world. Fairer taxes would help UK airports, airlines and businesses compete and succeed in a global market place, and boost inbound tourism and tourist spending in Britain. Fairer aviation taxes would increase economic activity, raise tax revenues (and help reduce the deficit). Golden geese are few and far between these days, Britain’s world class aviation industry is one that we should nurture and support.