New statistics show £158m increase in tax paid by air passengers
April 28th, 2015
New statistics published today by HM Revenue and Customs show that passengers paid £3.17 billion in Air Passenger Duty (APD) in the financial year 2014-15 – an increase of £158m or 5.2% compared with 2013-14.
The Office for Budget Responsibility estimates that the tax take will increase by a further £500 million during the next Parliament, despite the duty being abolished for children under 12 from this Friday (and for under 16s from March 2016) and a recent simplification of the duty’s banding system.
By 2019/20, APD is forecast to raise £3.7bn a year – more than beer and cider duties (£3.6bn) and the TV licence fee (£3.3bn), and the same amount as the Bank Levy.
The total number of passengers paying APD in 2014 was 105.9 million – 1.5 million fewer than the pre-financial crisis peak year of 2007. However, the amount of revenue raised by APD has increased by over 70% over the same period – from £1.8 billion in 2007 to over £3.1 billion in 2014.
The UK has the least competitive tax on flying in the world and the highest in Europe by a big margin. Germany has the second highest air passenger tax in Europe, but it raised just £745m from its Aviation Tax in 2014. Most European countries don’t tax their citizens or visitors to fly abroad.
Both the SNP and the DUP have set out their desire to see APD abolished in their respective manifestos which means that a hung Parliament could see political pressure build for further significant action to be taken.
· SNP manifesto 2015 – ‘For our tourism sector, we will press for the early devolution of Air Passenger Duty (APD) so we can use this new power to encourage more direct flights to Scotland, with a reduction of 50 per cent and longer term plans to abolish APD completely.’
· DUP manifesto 2015 – Air Passenger Duty (APD) has a disproportionate impact on the regions farthest from the most prosperous South East. The duty therefore harms Northern Ireland’s business and tourism sectors. It hurts family incomes and harms our economy. The exemption of children from the tax is a partial admission of the negative impact it places on passengers. As the duty is a disincentive to travel – it is bad policy. Over the next parliamentary term Air Passenger Duty should be abolished.
Responding to the publication of the new HMRC statistics Nathan Stower, Chief Executive of the British Air Transport Association, said:
“These new statistics are worrying for anyone who cares about increasing exports, encouraging business growth and investment, and expanding tourism. It’s time to ask ourselves why our competitors either don’t tax air travel at all or do so at significantly lower rates. It makes no sense for an island trading nation to have the highest tax on air passengers in the world. The next government should transform our competitive position and abolish this damaging tax on trade, tourism, families and businesses in the new Parliament.”
Commenting on the new APD statistics, Willie Walsh, IAG Chief Executive Officer, said:
“Passengers paid £3.17 billion in APD in 2014/15 – an increase of 824 per cent since its first full year in 1995/96. Over the same period inflation rose by just 82 per cent.
“This tax is completely out of control. It is the highest aviation tax in the world and it damages economic growth and jobs. No wonder the Scottish government wants to abolish it. APD should be scrapped UK wide.”
28th April 2015