APD Is Still Not Fair, Says Tax Specialist

A travel tax specialist has suggested the reforms to air passenger duty announced by the Chancellor George Osborne yesterday could lead to debate on some of the other distortions caused by the tax.

Osborne acknowledged in his Budget statement that the current multi-band tax had created a "sense of injustice" in Asian and Caribbean communities as they have to pay more to fly home than those heading to cities in the US, which are further away.

He said that will end on April 1 next year when all long-haul passengers will be taxed the same.

But Daniel Barlow, an indirect tax partner in the travel, hospitality and travel practice at Deloitte, pointed out there were other anomalies in the tax.

He said: "It will be interesting to see whether this announcement leads to debate on some of the other distortions caused by the tax.

"For example, a passenger flying from Belfast to Alicante will pay £13 APD if they fly direct. However, they are likely to pay £26 APD if they make the same journey but book two connecting flights through London with budget airlines.

"Similarly, a three-year-old child travelling to the Costa del Sol on holiday will be charged £13 APD, the same as an adult passenger - clearly the fares charged for these passengers, and the amount of aviation fuel consumed to fly them, will be very different.

"It's these types of distortion, as well as the tax itself, which the aviation industry will focus on ending."

The British Air Transport Association (BATA) is pushing for an end to double duty on domestic flights.

Chief executive Simon Buck said: "BATA welcomes the Government's reforms to the Air Passenger Duty at this Budget which reduces the overall tax take.

"This will save passengers travelling long-haul for leisure and business purposes over £200m each year compared to the level previously set out.

"We hope this positive first step recognizing the damage caused by this tax will lead to the Government undertaking further reforms of APD in future, such as on the double tax hit on domestic flights."

But the move to two bands has been welcomed by tourism chiefs in the Caribbean, who had long lobbied for a change.

"This is a complete victory for the Caribbean," said CTO chairman Beverly Nicholson-Doty, who thanked everyone who has supported the campaign, including British MPs and peers, the Caribbean High Commissioners in London, travel companies and airlines.

Source: Travel Mole