Budget 2013: Deloitte comments on the omission of Air Passenger Duty reform
21 March 2013
Daniel Barlow, an indirect tax partner in the travel, hospitality and travel practice at Deloitte, said:
“The government is committed to retaining Air Passenger Duty (APD), probably for the simple reason that it raises £3 billion of revenue per year and only costs 0.06 pence to collect for every £1 raised. However, the debate on APD is more complex. The aviation industry has put forward arguments that the tax does not help the UK’s competitiveness, given that the majority of EU Member States do not have a similar tax.
“Furthermore, there are areas where APD causes distortions of competition and requires reform. 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. The same passenger will pay €3 Irish Air Travel Tax APD if they go over the border and catch their flight to Alicante from Dublin. If the government is set on retaining APD, it’s likely that the industry will focus on ending these types of market distortion.”
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