In his budget speech March 20, Osborne declared the UK is building “the most competitive tax system in the world”, however he failed to even mention APD and will press ahead with the hike on April 1. Despite lobbying from the UK aviation industry, the duty on long-haul flights will increase by €2.35 (£2), however the tax on short-haul remains at €15.20 (£13). APD rose 8% last year and the treasury has said previously that it plans to keep future rises in line with inflation. The controversial tax, which has been scrapped in some other European countries, is forecast to rise 3.6% year-on-year, raising €3.4 billion in 2013-14 up to €4.5 billion by 2017-18. Dale Keller, chief executive of the Board of Airline Representatives in the UK (BAR UK), said the heavy burden on air travel contradicted Osborne’s declared aims. “Tax on the aviation sector is almost uniquely being increased,” he told Routes News. “This runs completely counter to the goal of bringing in more business with a competitive tax system.” Darren Caplan, Chief Executive of the Airport Operators Association (AOA), described the year-on-year rises in APD as “fundamentally damaging to the UK’s global competitiveness”. “The recent World Economic Forum statistics showed we are now 139th out of 140 countries in the world for ticket taxes and airport charges (only Chad is placed lower), and our eye-wateringly high levels of APD already mean we pay the highest passenger tax on flying in the world.” Campaign group A Fair Tax on Flying calculates that the increased APD would total £268 (€314) for a family of four flying in economy to Florida, or £332 (€389) for a flight to the Caribbean. A recent study by PwC concluded that the damaging economic impact of the APD means the UK government’s receipts from the duty are outweighed by its losses on other taxes. In a joint statement, IAG chief executive Willie Walsh, easyJet chief executive Carolyn McCall, Ryanair chief executive Michael O'Leary, and Virgin Atlantic chief executive Craig Kreeger condemned the rise in APD. "We are very disappointed that the Government’s tax on flying, already the highest in the world, will increase yet again this year and next," read their statement. "Increasing this alarmingly uncompetitive tax on business, trade, and inbound tourism beggars belief when the evidence clearly suggests that abolition would deliver growth, create 60,000 jobs and pay for itself through higher receipts from other taxes."There was, however, some good news for businesses, with Osborne cutting the rate of corporation tax on profits to 20% from April 2015. He said it was “the lowest business tax of any major economy in the world”. There are four bands of APD for economy flights, depending on the distance of the journey. Band A (0-2000 miles) £13; Band B (2001-4000 miles) £67; Band C (4001-6000 miles) £83; Band D (6000 miles+) £94. Business class rates are double that of economy.Source: routenews, Piers Evans
Gravity always wins!