Posted on: December 16, 2013
Travel taxes have been much in the news lately, and the news for travelers has not been good. We blame Britain.
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We blame the British government because of its airline departure tax, dubbed the Air Passenger Duty. It is the highest and most arbitrary -- and therefore the worst --such tax in the world. And it's going up yet again.
In his latest budget message to Parliament, contained in the "Autumn Statement," Chancellor of the Exchequer George Osborne made no mention of the tax except to project that income from this source is expected to rise by more than a third, to 4.3 billion pounds, or $7 billion per year over the next five years.
He thus tacitly implemented a previously indicated increase for April 1, when the duty will rise from 67 to 69 pounds on an economy-class ticket to the U.S.
At prevailing exchange rates, that's the equivalent of $113 and change. And, of course, it gets worse for those on longer routes and/or in premium seats.
It's getting to the point where a family of four leaving Britain could nearly take along a fifth family member for the amount of the tax they pay.
We believe that the many opponents of this tax have made the case many times over that it should be restructured. An analysis by PricewaterhouseCoopers last year demonstrated that the levy has such a negative impact on travel and hospitality that the British economy, as a whole, would be better off without it.
On top of that, the revenue isn't spent on anything that enhances air travel, and the rate structure is profoundly irrational. Ostensibly based on distance, the tax rate is pegged to the mileage between London and the capital city of the destination country. Thus, U.K. travelers to the Caribbean pay a higher tax than those flying to Florida, California or even Hawaii.
And yet, the British government stiffly dismisses all these arguments, demonstrating to every other government in the world what it is possible to get away with. As long as Britain keeps this tax and keeps raising it, the more it serves as a model for others to emulate. In this sense, rolling back this awful tax ought to be the global travel industry's top priority.
And it is now apparent from the exchequer's latest budget message that it's going to take more than reason and a sense of justice; it's going to take some political muscle. We encourage travel lobbyists everywhere to acquire some expertise on British politics. They're going to need it.
In the U.S., meanwhile, airlines and other travel interests last week were bemoaning the tentative budget deal worked out by House and Senate negotiators because it calls for an increase in the 9/11 security fee applied to airline tickets.
Currently $2.50 per segment, to a maximum of $10 per roundtrip, the security fee will rise under the proposed budget deal to straight-up $5.60 per one-way or $11.20 per roundtrip, beginning Oct. 1.
Depending of the number of segments, this could mean a 12% increase or as much as a 124% increase on some itineraries.
These are alarming percentages, made more alarming by the fact that unlike most other U.S. air-related taxes and fees, not all of this new revenue will be flowing to the TSA to improve its services to travelers.
Airline and travel industry lobbyists are right to be concerned about that, but by the standards of the chancellor of the exchequer, this is a piddling tax.
Politicians, including our lawmakers in Washington, have a knack for knowing what they can get away with.