UK industry experts say British Government’s APD consultation ‘a waste of time’

Heathrow Airport

BASSETERRE, ST. KITTS, DECEMBER 6TH 2011 (CUOPM) – Industry experts in Britain have branded as a “‘waste of time” the British Government’s consultation on Air Passenger Duty.

Despite a huge consultation on APD launched in March to ‘explore the scope for improving the fairness and efficiency of the current system’, the industry has been very disappointed by the results.

In the British Government’s response to the consultation published Tuesday, it backs all of the policies it outlined before the consultation took place.

These include a four-band system of APD based on the distance travelled and a reduced rate of APD for lowest fares.

“It’s an unbelievable set of results. The findings really don’t bear scrutiny and it’s something we’re going to go back to the Government with,” said Mike Carrivick, chief executive of the Board of Airline Representatives in the UK (BAR UK).

“It’s been a big waste of time and effort. Why have a consultation on change when you’re not prepared to change?”

Responding to the Treasury’s statement Tuesday Carolyn McCall from easyJet, Willie Walsh from IAG, Michael O’Leary from Ryanair and Steve Ridgway from Virgin Atlantic jointly said:

“The (British) Government’s consultation on APD has been a sham and a waste of taxpayers’ money.

“We are left with a tax that has already cost 25,000 jobs, is doing increasing damage to the prospects for economic recovery – and sends a message to the world that Britain is a difficult and expensive place to do business.

“We are united in calling for the Government to commission an independent study of APD’s overall economic value and impact. We have no doubt this would confirm that APD’s negative effect on UK GDP significantly outweighs its revenue benefit for the Treasury.

“Chancellor George Osborne confirmed as part of his Autumn Statement that APD would be extended to business jets, effective from April 2013, and that the proposed 10% increase in APD will go ahead in April 2012.

The (British) Government response Tuesday stated: “At Budget 2011 the Government froze APD rates for 2011-12. In recognition of the industry’s need to plan ahead, the Autumn Statement 2011 confirmed that APD rates will increase from 1 April 2012, as set out in Budget 2011.

“The (British) Government has been clear that APD is primarily a revenue-raising duty which makes an important contribution to the public finances, whilst also giving rise to secondary environmental benefits.

“Furthermore, VAT is not applied to flights and aviation fuel for commercial flights is not taxed.”

The (British) Government said the Department of Transport is considering regional connectivity and regional airports policy as part of its development of a sustainable framework for UK aviation which will be issued for public consultation in March 2012.

It will also continue to look at the feasibility of devolution of APD to Scotland and Wales.

The (British) Government states it will not offset revenues raised through the Emissions Trading Scheme (ETS) against APD, meaning that passengers will be taxed twice when they fly from January 2012.

The APD levels per passenger from April 2012 are as follows:

Reduced Rate Standard Rate
Band A (0-2000 miles from UK) £13 £26
Band B (2001-4000) £65 £130
Band C (4001-6000) £81 £162
Band D (over 6000) £92 £184

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