APD: The outdated tax holding Britain back from achieving our full economic potential

In 2014 the then Chancellor George Osborne took welcome steps to reduce the amount of APD paid by UK families by exempting children under the age of 16 from the tax entirely.

In doing so, the Government provided a welcome relief for hard-pressed families across the entirety of the UK.

Still there is more to be done.

Since it was imposed a little over 20 years ago, Air Passenger Duty has increased relentlessly. What began as a simple per passenger tax of £5 for short haul flights and £10 for longer haul flights has become £13 and £71 respectively. On long haul flights this represents a 610% increase in tax per passenger.

Why does this matter?

Two reasons. The first is about fairness. Why should UK families pay so much more in tax than their European counterparts to take a well-earned holiday? The UK’s air travel tax is amongst the highest in the world - five times the global average and double that of Germany which is the next highest in Europe. Two of our immediate neighbours - Ireland and the Netherlands - have abolished their tax altogether. Furthermore, the power to control APD is in the process of being devolved to the Scottish Government, who have made a commitment to cut APD by 50% from April 2018. The result of this will be that families in Stirling will pay less tax to fly than families in Southampton, turning APD into a postcode lottery. This is not fair. What is needed is an even and consistent tax across the whole country. 

The second is international competitiveness. In a globalised world this is crucial, and it has been even further underlined by the UK’s decision to leave the EU. Whatever opportunities and challenges Brexit poses, maintaining our position as a leading, outward looking, international trading nation is vital, and at its current levels, APD is a barrier to trade. Research by PwC has shown that scrapping APD altogether could create 60,000 jobs and boost our economy to the tune of £16bn. As things stand APD is costing economic growth and jobs that the country needs. 

It is for this reason that the air travel and tourism industries have come together to call for action to reduce or abolish this tax across the whole of the country. Only then will all UK families get a fair deal and the economy will better achieve its full potential.


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