Following easyJet’s proposals earlier this week, Jason Moore, environmental tax partner at Deloitte, comments on the opportunities and challenges of implementing a carbon-based tax on all UK flights:

“Proposals to replace Air Passenger Duty with a passenger (and perhaps a freight) carbon tax would make the carbon cost of each flight clearer for consumers.  A tax based on the level of carbon emissions per flight would make the relative carbon cost of a flight easier to understand and are an interesting contribution to the broadening debate around carbon taxes."

“In its current form the relatively low ‘flat rate’ Airline Passenger Duty is unlikely to lead to wholesale behavioural change amongst passengers and simply raises additional tax.  It also ignores freight and private flights.  In contrast, having a tax based on the carbon cost of a particular journey could encourage a change in passenger behaviour."

“There are however many practical issues that would need to be considered before any such a tax could be implemented.  For example, how would the carbon impact of each aircraft type be measured and verified; how would figures be obtained from overseas airlines; how would passenger load averages be included (so as to reflect the benefit of flying with a fully-loaded aircraft) and checked; how would passenger flights and cargo flights be dealt with under one regime and how often are all these figures updated?"

"Passengers paying a carbon tax would also want to know how the proceeds would be spent.  Air Passenger Duty is simply part of general taxation: would a government be prepared to dedicate tax revenue to spending in particular areas?"

"In practice it may also be very hard to set the tax at a level that would have a genuine impact on the majority of travellers’ flight choices without making flying prohibitively expensive for the less well off.”

Ends

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About Deloitte
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