Industry and public fury at APD hike
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The hike in air passenger duty (APD) has been met with fierce opposition by members of the public and Industry bodies.
Ministers were bombarded with more than 12,000 complaints from constituents opposing the rise that came into effect today (1 April).
Despite the backlash, the government sped the rise through, which means a family of four flying in economy class to Florida will now pay £268 in APD, while a family of four flying to the Caribbean will pay £332.
The duty has soared since its introduction in 1994, when each passenger faced a £5 tax to fly within the EU, or £10 elsewhere.
Simon Buck, chief executive of the British Air Transport Association, said the Government had “hit hard-working families where it hurts”.
“It’s not good enough to continue increase Air Passenger Duty when the clear economic evidence shows that it both damages the UK economy and adds hundreds of pounds onto the annual tax bill of many families who fly overseas every year,” he asserted.
European countries including Belgium, Holland and Denmark have abandoned aviation taxes, but the Government expects to collect £3.9bn in APD revenues each year by 2016.
PwC research published in Feb 2013 found that abolition of APD would result a) in a significant increase in the UK’s Gross Domestic Product and b) would increase the revenues to the Treasury from other taxes as a result of this increased economic stimulus – in other words abolition would actually pay for itself.
In the longer-term, analysis shows that the UK economy will forego £750m of wealth and 18,000 jobs due to the recent rises in APD (November 2010), with around half the extra revenue raised offset by tax revenue losses in the wider economy (source Oxera, 2009).