Wednesday 2 November 2011

Sky high taxation

APD is a lucrative tax, generating about £ 2.5 billion in 2011 for the UK's tax coffers. Originally conceived as an environmentally fair green tax, this pretence has been dropped in these hard times.

As a revenue generating tax it is very successful, but as constituted very unfair. Now pressure is building up for reform ahead of the 10% anticipated increase.
At present the tax is paid on departure from UK airports, so domestic passengers flying internally from the UK pay twice as much as a passenger flying from London to Turkey.

The tax paid was intended to be based on distance traveled as follows:

The distance from London is based on where the country's destination sites it's capital, so because Washington is nearer than Jamaica, Los Angeles passengers pay less than those traveling to Kingston, Jamaica.

The Caribbean countries are heavily dependent on tourism and this tax hits them hard.

Sadly everyone in the UK travel and tourism industry has been adversely affected too. Other overseas countries can retaliate or reduce their own version of APD taxes.
The Republic of Ireland abandoned its taxes, which made it cheaper for people from UK's Northern Ireland to travel from Dublin to the USA. Continental Airlines threatened to cancel its Belfast flights and The UK chancellor helpfully reduced the APD for this particular situation.

Now posters in Heathrow have appeared, accompanied by advertisements in the National newspapers highlighting the importance of the tourism industry to the UK and its friends abroad.

Will George Osborne listen?

I suspect that he will address the domestic travel issue, help the Caribbean countries and once again postpone the planned increase. If this happens, it will be a case of "Being thankful for small mercies".

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