The trouble is that…

By Global Tax Weekly

…despite their good intentions — governments tend to put their own self-interest first, and revenue production, rather than carbon reduction, is often the primary motive for “green” taxation. The United Kingdom’s air passenger duty (APD), hiked massively during the financial crisis, is probably the best example of a revenue-raiser masquerading as an environmental tax. The major flaw in the APD is that it is essentially a ticket tax, which is charged on a per-passenger basis, with the amount payable varying depending on distance and class of travel. This leads to some perverse results, the most obvious of which is that less tax may be paid by the passengers of a half-empty plane than a full one, despite the fact that the former may be emitting considerably more carbon per passenger than the latter. The banding system also seems to have been designed by someone with a limited grasp of geography; passengers flying to the Caribbean, for example, pay more APD than those bound for Florida, despite the two destinations being roughly equidistant from the UK. Somehow, Hawaii is also deemed nearer the UK than the Caribbean. APD has also done damage to the UK’s aviation and travel industry, and at least one airline has scaled down its UK operations in response to swingeing increases in the tax in recent years. Yet, at the same time, the Government’s avowed policy is to ensure that London remains Europe’s major aviation hub. Go figure! At long last though, the UK Government appears to be listening, and confirmation of plans to overhaul the structure of APD just about merits an encomium from me this week. A complete rethink might have been a better idea though; surely, the way forward is to encourage research into clean-burning fuels and to reward the companies investing in them, not clobbering a family going on its annual vacation.

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