Airlines make case for scrapping U.K.’s air passenger tax

By Gay Nagle Myers
Abolishing the U.K.'s Air Passenger Duty (APD) could create 60,000 jobs by 2020 in Britain, boost GDP and increase tax revenue, according to a study prepared by PricewaterhouseCoopers on behalf of four airlines.

The study, commissioned by EasyJet, Ryanair, Virgin Atlantic and British Airways parent company International Airlines Group, found that abolishing the tax would mean gains in income tax and the Value Added Tax due to more business travel and tourism.

Doing away with the tax also would increase the number of business and leisure travelers to/from Britain as a result of lower fares, according to the PwC research.

The U.K. Treasury dismissed the PwC findings.

"We do not recognize the figures in this report or agree with the assumptions behind it," a spokesperson said.

The airlines that commissioned the study are stepping up pressure on U.K. Chancellor George Osborne to ditch the APD in next month's budget hearings. The government had earlier announced plans to again raise the tax in April.

"APD is one of the three most destructive taxes, alongside the corporation tax and fuel duty," the airline chiefs said in a joint statement.

Supporting the call to do away with APD are the Caribbean Tourism Organization and the Caribbean Hotel and Tourism Association, which have long argued that the APD is damaging the Caribbean's tourism economy.

The APD is a departure tax based on the flight distance from the U.K. to the capital of the destination. The APD has four bands, and the Caribbean is in a band that levies a higher tax than on U.S. travel. A family of four flying to the Caribbean in economy class now pays $539 in APD.

"For the Caribbean, the tax is extra-territorial in effect and is damaging the region's tourism economy. We have argued that at the very least the discriminatory aspect of APD, which favors the U.S., should be addressed by rebanding the Caribbean to the same level as the U.S.," said Richard Doumeng, CHTA president, and Beverly Nicholson-Doty, CTO chairwoman.

Follow Gay Nagle Myers on Twitter @gnmtravelweekly. 
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