The UK beats Germany……..at the amount it taxes air passengers
With the last Budget of this Coalition Government exactly one month away, new analysis by the British Air Transport Association proves that the UK has the highest tax on flying in Europe by a huge margin.
Passengers paid over €4billion (£3.14 billion) in Air Passenger Duty (APD) in 2014, compared with just €1 billion (£745 million) raised by Germany’s equivalent Aviation Tax.
Germany has the second highest air passenger tax in Europe, but it raises £2.4 billion less than UK APD, despite Britons having few alternative options to flying for international travel, whereas Germany shares a land border with nine other countries.
The UK and Germany are just two of a handful of European countries to levy an air passenger duty, and in recent years many countries have abolished their equivalent taxes to become more competitive. For example:
- Ireland abolished their air travel tax in 2014;
- the Netherlands abolished their air passenger ticket tax in July 2009;
- Belgium abolished its air travel tax in 2008; and
- Denmark phased out its air passenger tax in 2006-07.
Those EU countries that do levy an equivalent tax (such as France, Austria and Italy) have much lower rates and raise significantly less revenue than APD.
Official forecasts suggest that the gap between UK APD and the German Aviation Tax will increase significantly over the next 5 years, partly because the UK Government chooses to increase APD rates by inflation each year. The UK Office for Budget Responsibility estimates that APD will raise £3.8bn (€5.1 billion) by 2019/20 – an increase of £600m from today’s level. In contrast, revenue from the German tax is forecast to increase by just £23 million to £768 million (€1.03 billion) by 2019.
Commenting on the findings, Nathan Stower, Chief Executive of the British Air Transport Association (BATA), said:
“Why should Brits pay so much more tax to fly for business, to visit family and friends or go on holiday than the Germans, or everyone else in Europe for that matter? Recent reforms to APD are steps in the right direction, but the next Government should finish the job, follow the lead of the Irish, the Dutch and others, and abolish APD in the next Parliament.”
The main cause of the difference in revenue is the difference in the amount of tax that passengers have to pay in the two countries. In the UK passengers pay £13 to fly economy within the EU (£26 for a domestic return flight), whereas passengers flying within the EU from Germany pay just £5.70 (€7.50). Passengers flying long-haul in economy from UK airports have to pay £71, compared to just £32.10 (€42.18) in Germany.
Passengers in Scotland may soon be paying German-levels of APD because the draft legislation implementing the Smith Commission recommendations includes the devolution of powers over APD to Scotland. The Scottish Government is committed to halving APD, leading to full abolition, and has called for this devolution to take place as soon as possible. Speaking at BATA’s annual dinner on 28 January, Alex Salmond confirmed that Scotland would cut APD and labelled the tax “a millstone around the neck of this industry and of the Scottish economy.”
18th February 2015