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Interex backs Air Tax Campaign

09 Aug 2013

Interex, an award winning UK exporter of Automotive and Motorsport components today backed a new campaign aimed at putting pressure on the Government to introduce fairer levels of taxation on air passengers. The campaign launched by A Fair Tax on Flying is designed to encourage local businesses to sign a petition which will be sent to the Treasury highlighting the damaging impact that Air Passenger Duty (APD) is having on the UK’s economic growth. APD is the highest air passenger tax in Europe, and companies from across the UK have lent their support to the calls to reform this unfair duty which is putting UK businesses at a competitive disadvantage.
Managing Director David Dodd said:

"It’s crucial that policy-makers look hard at the detrimental impact of APD on the UK economy. APD is a hugely damaging tax, making the UK less competitive than our European neighbours and hurting our connectivity with developed and emerging markets.

A large part of our business is in supplying the Caribbean region where the Air Passenger Duty tax has had a much larger impact on tourist numbers.

The rate of APD applied to the Caribbean discriminates against the region because of the way it is structured. The tax is calculated, by measuring the distance from London to the destination’s capital city, those flying to the Caribbean currently contribute more in APD than those flying to California or Hawaii. Despite ongoing protests from Caribbean governments, and months of discussions between representatives from the islands and the Treasury, the British government has refused to yield over the issue. Tourism to the Caribbean is being hit hard, their economies are suffering and this has impacted on our exports there.

I would encourage all local businesses who are concerned about APD to back A Fair Tax on Flying's campaign so that we can demonstrate to the Treasury just how much bewilderment there is about its decision to introduce year-on-year increases in the tax. Businesses such as ours are the driving force of our economy and are vital to the economic recovery, so it is important that we make our views known about the impact of this tax on jobs, growth and connectivity with the rest of the world.”

The World Economic Forum’s recent tourism competitiveness report ranked the UK 138th out of 139 countries for air ticket taxes and airport charges. It has been estimated by consultancy PwC that APD represents an additional £500m per year tax on UK businesses. A similar amount is also levied on corporate travellers visiting the UK – creating a barrier to trade and business. According to PwC the GDP boost to the UK economy from cutting or abolishing the tax would amount to at least £16 billion in the first three years and result in almost 60,000 extra jobs over the longer term.

The initiative follows a campaign last year during which 200,000 people wrote to their local MP and over 100 MPs back a Treasury-led review into the tax.
More information about APD:

  • In May 2013, the Transport Select Committee said that a fully costed study into how much Air Passenger Duty impacts the UK economy should be undertaken, and if this provides clear evidence that the duty causes harm to the economy or government revenue, it should be significantly reduced or abolished.
  • 200,000 people wrote to their local MP in 2012 calling for the Treasury to undertake a review into the economic impact of APD.
  • PwC research published in Feb 2013 found that the cutting or abolition of APD would result in a significant increase in the UK's Gross Domestic Product and increased revenues to the Treasury from other taxes as a result of this increased economic stimulus – in other words it would actually pay for itself.
  • The overall APD tax take increased significantly on 1st April 2012 (after the Government implemented an 8% APD increase) with an increase once again from 1st April 2013. Further rises are planned to take effect from 1st April 2014.
  • APD raised £2.8bn in 2012/13. The Office for Budget Responsibility says that APD revenue is projected to be £3.8bn in 2017/18.
  • A ComRes poll (Oct 2012) found that four out of five people want to see Air Passenger Duty cut or frozen. The results come from ComRes research of more than 2,000 people showing that 82% of the public want changes to APD.
  • Over 100 MPs have publicly backed calls for a Treasury-led economic impact assessment of APD – many of them by supporting EDM 174 in the 2012-13 Parliamentary Session, “Air Passenger Duty”.
  • An International Air Transport Association report (Dec 2011) said that “European carriers are by far in the most challenging position. Higher passenger taxes and weak home market economies have limited profitability in Europe.”
  • By the Department for Transport’s own figures, aviation taxes exceed the sector’s environmental costs by over half a billion pounds every year.
  • Many European countries including Belgium, Holland and Denmark have abandoned their aviation taxes, due to the negative effects on their economies. In the longer-term, analysis shows that the UK economy will forego £750m of wealth and 18,000 jobs due to the recent rises in APD (November 2010), with around half the extra revenue raised offset by tax revenue losses in the wider economy (source Oxera, 2009)

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