Chilli
I'm not trying to start an argument, but your position is quite wrong on state aid, so I'll post a reply that you may find helpful in understanding the position. Note that I am not a lawyer, but I do work as a consultant pan Europe and believe that I have a reasonable grasp of the law.
This info is purely about tax incentives aka state aid, not about the rights and wrongs of who pays for the system or GA users being badly done to
Also, you may feel that the laws are more often observed in the breach!
Sorry, but seeing as the CAA, NATS and all other sides of the aviation industry are self funded (no government assistance / subsidies) and haven't been since NATS was sold off your logic is flawed to put it mildly. My comprehension of your post was, therefore, correct.
Let's have another go. CAA, NATS et al exist because the UK government lets them act as franchises and like most franchises, they pay their own way.
However, the UK government chooses to collect no duty or tax on AVTUR and this provides an incentive to the airlines who pay the nav charges that pay for the services provided.
Other forms of transport, e.g. road hauliers, do pay tax and/or duty, so there is asymmetric treatment in place.
(AVTUR tax free is just that, it's not a subsidy, therefore it just means the government is looking elsewhere for financial input).
Taxing one group of people and not another is considered to be potentially providing unlawful state aid under EU rules, because an incentive is being offered.
I know from reading your posts on many threads that you understand the ATC rules and regs very well, but you don't know very much about the Free and Fair trade laws in the EU by the content of your replies, which I guess is understandable given your job.
Here's an extract from an official Maltese publication that states things simply, I have capitalised the key words.
"State Aid
State aid is financial support that is granted by governments to certain companies. We usually speak of “subsidies” which are direct grants. But there are other forms of state aid, such as TAX INCENTIVES, subsidised interest rates on loans or loan guarantees. EU law prohibits state aid because it gives an unfair competitive advantage to assisted companies over companies that are not assisted. However, not all types of state aid are prohibited. State aid is allowed if it is granted for justifiable reasons such as, to help small businesses, for restructuring, training, job creation or to help regional development. State aid which is limited in amount is also exempted from EU rules. "