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Travel Firms Welcome UK Plane Tax
May 18, 2010

The British travel industry and airlines have welcomed the new UK coalition government’s decision to replace the Air Passenger Duty (APD) in favour of a 'per plane' tax based on emissions.

The proposal, contained in the Liberal Democrat party's general election manifesto, would capture freight movements by air for the first time and impose an additional higher rate of tax on domestic flights for which alternative less polluting travel is already available.

Responding to the government’s announcement, Mark Tanzer, Chief Executive of the Association of British Travel Agents, said: “We have always stated that the travel industry should be taxed fairly and that a system more closely aligned to the efficiency of aircraft and distance travelled is the fairest way to achieve this, and we welcome the government’s move to adopt a per plane tax. However the amount of this taxation must not be set at a punitive level and when the European Union’s Emissions Trading Scheme comes into force in 2012 it should be scrapped."

It is expected that the per plane system will more than double the GBP1.9bn generated annually from the APD, but the new levy is expected to hit short-haul flights the most; these flights currently attract a GBP11 fee per passenger.

Nonetheless, Andy Harrison, Chief Executive of short-haul budget airline Easyjet, has welcomed the proposed reform of the UK’s "daft" air tax.

"A tax that forces families to subsidize private jets, cargo planes and 20 million foreign transfer passengers per year is way past its sell-by date. From an environmental perspective APD gives a perverse incentive – full planes pay the highest tax whilst empty ones pay no tax at all. We need to make air tax greener and fairer now," he commented.

However, national flag carrier British Airways (BA), which is struggling to cope with the disruption caused by the volcanic ash cloud and an ongoing industrial dispute with its cabin crew, is more sceptical about the supposed environmental benefits of the new tax. According to recent reports, It has been suggested that the new tax would increase BA's annual tax burden by GBP150m, at a time when it is expected to be making substantial losses.

Source :- http://www.tax-news.com