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Two main UK political parties pledge to replace environmental passenger duty with per-plane tax

Two main UK political parties pledge to replace environmental passenger duty with per-plane tax | APD

EasyJet welcomes UK opposition parties pledge to reform APD (photo: Bristol International Airport)
Wed 14 Apr 2010 – Ahead of a UK general election on May 6, the two main opposition parties have said they will replace Air Passenger Duty (APD) – a revenue-raising tax with ‘green signals’ – with a per-plane tax. The change had been previously mooted by the present Government in a 2008 consultation but was eventually rejected. In its manifesto, the opposition Conservative Party said it would “reform APD to encourage a switch to fuller and cleaner planes”. 
 
The Liberal Democrats’ manifesto calls for the introduction of a higher rate of per plane duty for domestic flights “for which alternative and less polluting travel is readily available” and plans to raise £3 billion ($4.6bn) per year from the tax.
 
Both parties have repeated a commitment to reject plans for additional runways at Heathrow, Gatwick and Stansted.
 
Although APD is not a popular tax with the airline or tourism industries, it does exclude air freight and transfer passengers hubbing through UK airports, so favouring the larger international carriers. As they benefit from neither of these, but have higher load factors, the low-cost airlines, on the other hand, will be encouraged by a potential switch to a per-plane tax.
 
EasyJet CEO Andy Harrison said: “We welcome the Conservatives’ promise to reform 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. It should be reformed from a poll tax into a flight tax that taxes emissions, not families.”
 
The pledge was also welcomed by the European Low Fares Airline Association (ELFAA), whose 10 members carry over 160 million passengers a year and account for over 35% of scheduled intra-European traffic.
 
“We commend this move by the Conservatives to reform what is essentially an unjust tax on UK consumers,” said the Secretary-General of ELFAA, John Hanlon. “In its current form the APD commits the dual sin of burning a hole in the pockets of British families whilst simultaneously hampering the overall competitiveness of the UK’s aviation sector.
 
“The UK Government itself acknowledged last year that aviation, before being included in the EU ETS, is already more than covering its environmental costs. Hence any additional measures in this area should not result in extra outlay for an industry which is ready and willing to play its part in reviving the UK’s flagging economy.”
 
ELFAA called for the withdrawal of APD altogether once aviation enters the EU Emissions Trading Scheme from 2012.
 
The UK Government substantially increased APD rates in November 2009 and plans further increases, if returned to power, in November 2010. APD raises around £1.9 billion ($2.9bn) per year.
 
However, the Liberal Democrats plan to raise an annual £3 billion ($4.6bn) from its revised per-plane duty to help reduce the UK deficit and to fund income tax reforms to help the lower paid.
 
A spokesman for the Liberal Democrats told the BBC that its switch to a per-plane duty would provide an incentive for airlines to fill their planes. He conceded it would have an adverse effect on the amount of taxes airlines paid but it was “a fair and justifiable way of reducing environmental pollution.”
 
The Conservative manifesto also re-iterated the party’s policy to scrap plans for a third runway at London Heathrow Airport and second runways at Stansted and Gatwick airports.
It also said would begin work “immediately” on a high-speed rail line connecting London to Heathrow and on to the north of England with construction starting in 2015. This would be followed by a second stage that delivered lines to north-east England, Scotland and Wales.
 
The incumbent ruling Labour Party said in its manifesto: “We support a third runway at Heathrow, subject to strict conditions on environmental impact and flight numbers, but we will not allow additional runways at any other airport in the next Parliament.”
 
The Conservative Party are currently ahead in the opinion polls but there is a likelihood of a ‘hung’ Parliament with no outright winner. It is therefore possible either the Conservative or Labour parties will be forced to enter into a coalition with the Liberal Democrats in order to gain power after the election.
 
 
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