We welcome the fact that the coalition Government has restricted increases in APD to be in line with inflation only. This reversed the increasingly damaging real terms increases which were made in 2007-2010. However, as the Airport Operators Association (AOA) noted in their report An Integrated Policy Framework for UK Aviation (2012), APD is still at a high and potentially damaging level – the effects of which have not been analysed by any Government. The same AOA report noted that, for economy passengers flying long haul, APD rates are about six times the average of other countries in Europe that still levy a charge. Some European countries – Belgium, the Netherlands and Denmark – have abandoned their aviation taxes altogether.
The relatively high levels of APD, combined with a lack of price competitiveness due to the level of VAT, and a time consuming, bureaucratic and costly procedure for applying for a visa combine to make Britain’s international tourism offer considerably less attractive than it should be.
We agree with the AOA that there needs to be a study into the overall effects on total tax revenues and economic activity arising from these levels of APD. The debate in the House of Commons in December 2012 was encouraging in that many MPs from all parties were alert to the potential disadvantages of Britain continuing to tax flights at such levels.