Contact: James Igoe
Deloitte
Public Relations
+44 (0)20 7303 8247

Tony McClenaghan, tax partner at Deloitte, welcomes the announcement to replace Air Passenger Duty with a tax payable per plane rather than per passenger from 1 November 2009. 

“Proposals to replace Air Passenger Duty with a tax based on the level of carbon emissions per flight would make the relative carbon cost of a flight easier to understand.”

“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.”

“It will be interesting to see the outcome of the proposed consultation with industry and stakeholders.  There are 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 the new tax would also want to know how the additional £520m generated would be spent.  Air Passenger Duty is simply part of general taxation: is the government 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.  The weakness with a tax such as this is that with the tax levied on the airline and not the individual, it will make it less transparent for individuals to see the impact of their behaviour.”

Visit www.ukbudget.com for Deloitte's full analysis of the 2007 Pre-Budget Report.