Air Passenger Duty [Archive]

jabird

21st Mar 2013, 16:33

The big difference between the bulk of the UK and countries mentioned on the "Fair Tax" website is that we are not physically joined to the main continental land mass.

When the Dutch had higher flight taxes, NRN filled with Netherlands numberplates. If Denmark put their taxes up noticeably above Sweden, people pay the toll to cross the Oresund and use MMX.

Now of course there is some seepage to DUB (esp from BFS as discussed via the UA EWR service), and some people take Eurostar (no APD), ferries or a short hop (lower APD) to CDG and AMS. What percentage of the market in total do this? 1%? 2%?

I don't accept the argument that getting rid of APD would be "zero cost to the treasury" - and I've yet to read a convincing argument to say so. Frankly, complaining about the cost of a family trip to Florida having the APD component go from £40 to £260 is the LAST thing that is going to get the Treasury to yield, as slashing this tax is just going to make it easier for families to fill their suitcases in the Orlando malls, thus dodging VAT as well as not paying APD.

I somewhat doubt APD could take much more for long haul flights, but I really can't see it being repealed on shorter legs. APD might be labelled as a green tax with the intention of changing behaviour, but the reality is that it is an easy-to-milk cash cow as there are few alternatives for most European destinations. If the industry wants it changed, they need to come up with something fairer, and stop pretending it is going to be cancelled.

Capetonian

21st Mar 2013, 16:36

Granite City Express

21st Mar 2013, 16:45

jabird,

I don't accept the argument that getting rid of APD would be "zero cost to the treasury" - and I've yet to read a convincing argument to say so. Frankly, complaining about the cost of a family trip to Florida having the APD component go from £40 to £260 is the LAST thing that is going to get the Treasury to yield, as slashing this tax is just going to make it easier for families to fill their suitcases in the Orlando malls, thus dodging VAT as well as not paying APD.
The Dutch government produced a document that showed that they raised 350m euros in APD but lost more than a BILLION euros in tourism and business revenue. That was their primary driver for scrapping their airport tax.

The family trip to Disneyworld is not what is damaging the UK economy. It is the lost business because it costs less to send staff through Dublin, Schiphol or Frankfurt that is the real killer. It never appears on the bottom line of a spreadsheet because it never arrives in the UK economy. When a country's economy relies on tourism (9% of the Scottish economy is tourism based) then the lost revenue due to APD has a real and damaging effect on small businesses in rural areas.

it is worth having a read through this...
http://corporate.easyjet.com/~/media/Files/E/Easyjet-Plc-V2/pdf/content/APD-study-Abridged.pdf

Dannyboy39

21st Mar 2013, 17:29

The industry is an easy target. Joe Public isn't interested in the long term interest of the industry; all they care about is getting their low cost flight to Tenerife or Malaga every summer. They are the vote winners.

Certainly a contradiction in Gideon's terms, that he wants the country to be the most competitive nation in the world for business and tax.

The UK now has the 2nd WORST tax in the world for flying - only Chad is worse. Out of 150 countries.

j636

21st Mar 2013, 17:45

Now of course there is some seepage to DUB (esp from BFS as discussed via the UA EWR service), and some people take Eurostar (no APD), ferries or a short hop (lower APD) to CDG and AMS. What percentage of the market in total do this? 1%? 2%?

Not anymore as APD was dropped from Belfast or reduced in line with ROI. If there is still people using DUB its by choice and TBH I can't blame them if its BFS or DUB as a choice.

ESCNI

21st Mar 2013, 21:30

APD was only dropped from the intercontinental (Newark) route.

It still applies to every other route.

:mad:

jabird

21st Mar 2013, 21:40

This shambolic and shameful excuse for a government seems determined to destroy the competitiveness of the UK's travel industry, airports, and airlines. It might be different if the national carrier were state owned and they had their snouts in that particular trough.

Well Ken Clarke brought it in, the last lot halved it then doubled it back, and introduced add-ons for long haul and premium cabins. The coalition are just continuing where Labour left off, and to quote Lord Adonis (on Heathrow, but same issue) - the Lib Dems would have doubled it again, so the tail is wagging the dog. If you are lucky, you will get a crowd pleasing peg back to £10 for short haul in the next budget, but APD isn't going to be scrapped.

The Dutch government produced a document that showed that they raised 350m euros in APD but lost more than a BILLION euros in tourism and business revenue. That was their primary driver for scrapping their airport tax.

Like I said above, Dutch APD at UK levels fills the car parks at NRN, DUS, CRL, LUX, BRU and so on. Show me that more than 1-2% of ex UK traffic is hopping to other hubs for onward travel, then you have a strong case for cutting back on the long haul APD. In the meantime, the cost and hassle of getting to these continental hubs still outweighs the savings on the ticket for most people, most of the time.

It is the lost business because it costs less to send staff through Dublin, Schiphol or Frankfurt that is the real killer.

If pax are routed LHR-AMS-ORD instead of LHR-ORD direct, the APD is the same, but the fare is cheaper. That's down to the natural market value of a direct routing, and has been this way for decades. Likewise, an AMS-LHR-ORD routing will often be cheaper than AMS-ORD direct.

When a country's economy relies on tourism (9% of the Scottish economy is tourism based) then the lost revenue due to APD has a real and damaging effect on small businesses in rural areas.

Agreed. Now passenger flows might not quite subscribe to Newton's laws, but as you can't impose a tax that only applies to Scots going away on holiday, you have to accept that the UK as a whole still has a tourism deficit.

I read the PWC report when it came out, and it made some good points, but it did not address this imbalance. Even if you argue that each £1 of APD has more impact on the tourist coming in than it does on the Brit going away, the sun still shines brighter on the costas, and that isn't changing soon.

Now as for the anomaly of domestic APD, I'd love to hear a way to solve that one. Why should passengers of any kind be taxed twice to make what is usually a relatively short journey (compared with, Istanbul for example, which is taxed at same rate).

The EU wouldn't just let you scrap it, but could you halve it on grounds most people are coming back the same way, so they'll pay the same in total? The status quohere is surely as damaging to UK tourism and business as anything else?

Certainly a contradiction in Gideon's terms, that he wants the country to be the most competitive nation in the world for business and tax.

Yes, but we were also promised the "greenest government ever". This is a dirty industry, and you still have the likes of FoE chomping for bigger rises in APD. We know APD is a "blunt instrument", but other suggestions, such as taxing the aircraft (therefore encouraging better seat occupancy), have not materialised. Even though LH APD covers the carbon cost about 5 times over, there are still other local environmental issues with airports, and as there neither is nor can be VAT on international airline tickets, HMRC still want to get their cash somehow.

Not anymore as APD was dropped from Belfast or reduced in line with ROI. If there is still people using DUB its by choice and TBH I can't blame them if its BFS or DUB as a choice.

I referenced what is effectively the "United exemption" as the tax was abolished primarily to preserve traffic on that one route, which (then) Continental wanted to axe.

The waiver only applies to direct long haul routes, so if you route to NYC with BA via LHR, you pay the higher rate. As DUB has a far greater range of both SH and LH routes, it is only natural for people to use it as an alternative, for the double advantage of lower taxes and a better route network.

Granite City Express

21st Mar 2013, 22:34

Like I said above, Dutch APD at UK levels fills the car parks at NRN, DUS, CRL, LUX, BRU and so on you are missing the point. Why have a tax that raises 350 million if it creates a loss of a billion in other areas of the economy? The Dutch recognised it and quickly killed the tax. This isn't about VFR or holiday traffic; this is about business traffic.

I know of two companies that have relocated to mainland Europe because the increase in the travel budget was significant and a number of other companies have scaled back their operations here and moved departments to Dublin, Amsterdam and Brussels. This tax is costing people their jobs in the UK.

APD is not a green tax, it is just a gouge. If the government wants to level the playing field put a similar tax on ferry pax long distance coach pax and all cross country rail pax, also stop any government subsides on railways, then it starts becoming fair. the sun still shines brighter on the costas, and that isn't changing soon.exactly! So why make it even more difficult to attract tourists to a damp driech Scottish summer? Tourism is important to many parts of the UK economy and should be protected - not damaged by a shortsighted punitive tax that causes a net loss compared to what it generates in income.

jabird

21st Mar 2013, 23:02

you are missing the point. Why have a tax that raises 350 million if it creates a loss of a billion in other areas of the economy? The Dutch recognised it and quickly killed the tax. This isn't about VFR or holiday traffic; this is about business traffic.

I'm not missing any point, I'm saying the Dutch experience is not directly relevant to the UK.

Unless you are proposing that Aberdonians unhappy with high APD will be filling the car parks of SVG?

Like it or not, there is sea separating us from the rest of Europe, so the arguments to reduce the tax do not work as well here. Of course it hurts domestic tourism, but it also earns from the far larger outbound market. As I said before, I've yet to see any convincing evidence that UK APD is costing us more than it brings in, and the PWC report was no different.

Fairdealfrank

22nd Mar 2013, 01:09

Quote: "Like I said above, Dutch APD at UK levels fills the car parks at NRN, DUS, CRL, LUX, BRU and so on."

That doesn't explain why Ireland reduced its equivelant of APD to a low flat rate of Eu 3.00 (£2.40). In that rspect, Ireland doesn't share a land border with country levying lower rates of APD or no APD: it only has the UK with much higher rates.

The "damage to the economy in general, to tourism (outward and inward), to inward investment, etc." arguments are more convincing.

Granite City Express

22nd Mar 2013, 01:32

I'm not missing any point, I'm saying the Dutch experience is not directly relevant to the UK.you are missing the point completely. I cant make it any simpler for you. The tax raised 350m. The damage it did to the rest of the economy was over a billion. Net result a loss of 650m.

:hmm:

PAXboy

22nd Mar 2013, 02:49

If the govt starts taxing people going cruising on those whacking great palaces that weigh over 100,000 tonnes (the two largest of Royal Carribbean International weigh 225,282 tonnes) - then I'll believe that it's a green tax. :hmm:

Bagso

22nd Mar 2013, 07:44

Pretty much halted long haul growth in its tracks at Manchester.....

We now have a farcical situation where there are 12 flights a day from Dublin to the US, if you are savvy you will buy a ticket Dublin - Man and a separate ticket Dub - USA...........

The transfer time is more than made up by the savings using US preclearance.

A number of these flights should have been coming to Manchester but it is now so uncompetitive airlines are looking elsewhere.

The irony is APD was introduced as a "green tax", in the case of Manchester it is simply diverting pax to connect via Eire and EEC where APD has been scrapped....

"doubling the number of flights".

jabird

22nd Mar 2013, 14:27

That doesn't explain why Ireland reduced its equivelant of APD to a low flat rate of Eu 3.00 (£2.40)

I remember MOL lobbying for this and promising a whole load of new routes, which iirc didn't quite happen. Without being party to the Irish govt's logic or their inbound/outbound tourism stats, can only suggest they saw an economic advantage which UK govt doesn't see. How strong is the (not literally) green lobby in Ireland? How much lobbying from SNN, an airport with a route network well beyond what would usually be expected of a place that size?

The tax raised 350m. The damage it did to the rest of the economy was over a billion. Net result a loss of 650m.

Let's say the tax was expected to raise 1bn, but they found more people used non-Dutch airports than expected, resulting in a lower tax take?

If the govt starts taxing people going cruising on those whacking great palaces that weigh over 100,000 tonnes (the two largest of Royal Carribbean International weigh 225,282 tonnes) - then I'll believe that it's a green tax

Huge tonnage moving very slowly, but certainly not enhancing business links and almost entirely exporting currency. However, I'd be a bit worried about the UK government trying to tax its citizens on an activity which usually takes place entirely outside its borders. Then they'd go for foreign car hire, then we'd be ending up no better off than the Cypriots.

However, government does have the right to tax flights leaving the UK, and has chosen to tax the longer distance ones more. Now is this really about the environment, or is it because APD is effectively a sales tax, so the longer / more luxurious flights get taxed higher?

The transfer time is more than made up by the savings using US preclearance.

Hardly. If you want "safety" of a through ticket, needs a 24 hour layover in order to only be liable at European rate. If you book separate contract, segment A has no liability for delay on segment B, even if A+B are same carrier. Going via DUB, a lot of the effective "feed" is with Ryanair - mostly reliable, but if anything goes wrong, you are well and truly stuffed.

The irony is APD was introduced as a "green tax", in the case of Manchester it is simply diverting pax to connect via Eire and EEC where APD has been scrapped....

If this was the majority of users, then yes, that would be counterproductive. I put it to you it is about 1-2% of actual journeys. I have tried it both ways, and in the end, I found I saved no money taking hop&skip route, but I did get to see a great deal more!

Now you can get insurance to cover these connections, but you will either find a heavily loaded premium, or clauses about much longer minimum connections than a through ticket will give you. So going back to the scenario of the Lib Dems wanting to DOUBLE long haul APD - that is where I think hop&skip would become the norm, and then it would be seriously counter-productive.

In the meantime, I know the industry hates APD, but as there is no VAT on flights, and no duty on fuel either, I don't see any it being repealed, or even reduced beyond a token equivalent of 1p in the pint any time soon.

Trossie

22nd Mar 2013, 14:51

There is absolutely no way that APD is a 'green' tax: It is simply aviation highway robbery that is perpetuated and promoted by the 'greenies/lefties' who have absolutely no understanding of the industry but in their mean and nasty way want to punish something that they perceive as 'elitist'.

I have known people to take to the roads on their own in an old and inefficient 'banger' rather than take a domestic flight for the same journey because the addition of APD to the ticket price made driving more attractive. That aeroplane therefore departed with an empty seat while an extra car was on the roads. The can be absolutely no 'green' justification of APD there! But the 'greenies/lefties' will be feeling smug about the idea that they stopped someone travelling by air. (And just to confound the 'no duty on airline fuel' brigade, that domestic flight paid full VAT on the fuel used in addition to the APD charged.)

For anyone taking a long-haul flight from much north of the Watford Gap, they will have to include the costs of travel down to either LHR or LGW (or even worse in future: right across London to Kent if that brainless 'Boris island' idea ever gets taken seriously!) plus probably the cost of a night in an airport hotel. Why not take a low-cost flight to AMS, spend a night in an airport hotel there and fly away without having had to shell out a fortune in ADP highway robbery?

And if you are connecting from say Canada to India, avoid Britain entirely and connect through the likes of AMS or BRU to avoid the APD highway robbery. (Or better still, avoid Europe entirely by connecting through the Middle East and avoid the extra costs of the EU's farcical 'emissions trading' scheme -- that's a nonsense politically induced 'commodities trading' scam if there ever was one!)

British jobs and a valuable British industry? Nah. No need to worry about them. The 'greenies/lefties' will be feeling all smug about the fact that they have helped crush one of those bastions of 'elitism', without having the brains to realise that they are killing off the very progress that has moved us away from relying on coal-fired steam engines for our transport, or even further back, having the roads covered with horse dung.

There is no common sense justification of APD other than yet another way of stealing people's hard earned money from them in order to support bloated public sector 'jobs' (or buy duck houses for MPs' ducks!).

Granite City Express

22nd Mar 2013, 16:37

Let's say the tax was expected to raise 1bn, but they found more people used non-Dutch airports than expected, resulting in a lower tax take?

This just is not getting through to you is it? :ugh:

They raised the target revenue. They found, because the Dutch like to know these things, that the rest of the economy suffered because of it.

Initial Ministry of Finance estimates had predicted some €350 million annually in tax revenues to be generated. A later Government study estimated that the tax had cost the Dutch economy some €1.3 billion in lost revenue.

In the meantime, I know the industry hates APD, but as there is no VAT on flights, and no duty on fuel either, I don't see any it being repealed, or even reduced beyond a token equivalent of 1p in the pint any time soon.Remind me again how much VAT is charged to ferry, rail and bus passengers? How much duty do rail and ferry operators pay on their fuel? How much tax does a Eurostar passenger pay on their journey from London to Brussels and then compare it with the amount of tax an airline passenger pays on exactly the same journey.
How much subsidy does a rail operator get? I can guarantee it is a damned sight more than any airline would ever even dream of getting.

The only place where this tax may have a beneficial effect is Heathrow, in order to reduce the max capacity situation there, but for anywhere else in the UK it is destroying the airline industry.
Article from the Telegraph (http://www.telegraph.co.uk/travel/travelnews/air-passenger-duty/8945430/Air-Passenger-Duty-a-tax-on-all-your-dreams.html)

jabird

22nd Mar 2013, 19:33

There is absolutely no way that APD is a 'green' tax:

Flying is a dirty business, whether you want to admit it or not. APD is not, and never can be a directly proportional response to the pollution caused, but it still performs the dual function of discouraging some people to fly, whilst also raising revenue for HMRC (whatever the other implications).

'greenies/lefties' who have absolutely no understanding of the industry

Everyone on this forum flies (whether up front or elsewhere), and most politicians know damn well that the low cost airlines, following on from the charter operators, have made flying something that is far from elitist. However, it also comes with a heavy environmental cost, and one way to mitigate that is through flight taxes.

mean and nasty way want to punish something that they perceive as 'elitist

There is nothing inherently mean about charging a departure tax, given that other taxes are not (and cannot be) levied on the industry. However, what certainly was mean was when Darling doubled APD overnight, and then charged it on tickets already bought. That struck me as particularly vindictive, and as was rightly argued at the time, it was like HMRC coming round to your house, and taxing you on beer and wine in your fridge / cellar.

an old and inefficient 'banger' rather than take a domestic flight for the same journey because

Again, not really a fair comparison, as most cars are much younger than that! Also, comparing a domestic flight with driving has so many different variables, there is no automatic assumption one is better than the other.

However, there can be no denying that the shorter domestic legs, where so much fuel is used on taxiing, takeoff and landing, are particularly inefficient in terms of both fuel use (balance of payments) and pollution (local and CO2).

To go back to the Dutch example - there is (virtually*) no domestic market in the Netherlands, so less reason to encourage modal shift, but within the UK it is reasonable to expect some journeys to be made by train instead of air, as is already the case for city pairs such as LON-MAN.

*Watching Maastricht Airlines with interest.

That aeroplane therefore departed with an empty seat while an extra car was on the roads

By that same logic, there would be loads of flights between Heathrow and Ringway operating empty because APD moved people on to the trains. The reality is that airlines respond to the market and adjust schedules accordingly. There are other natural reasons why the train has won market share, largely related to cost of fuel and improved train services, yet despite this, the market still supports LON-MAN shuttle services, together with the new VS / BMI replacement on this route, especially as a huge amount of this traffic is transferring.

that domestic flight paid full VAT on the fuel used in addition to the APD charged.

I don't believe that to be the case, but if it was, surely the airline would just reclaim it? Would this not also result in a huge amount of tanking, especially as many BE flights run through JER / GCI & IOM, which are not in the UK for VAT purposes.

That is my interpretation based on link below, any accountants please correct:

http://www.parliament.uk/briefing-papers/SN00523.pdf

Why not take a low-cost flight to AMS, spend a night in an airport hotel there

Anyone who flies in to AMS or CDG and spends the night at the airport, instead of venturing into town needs their head read! But this sort of double leg journey is still a niche market - I tried it out last year, but I don't see it working for families, and not for business travellers either - unless they are getting a much cheaper fare too (on top of not paying APD).

if you are connecting from say Canada to India, avoid Britain entirely

Or just stay at the airport, or move on within 24 hours and you don't pay any APD, as your journey is not deemed as being from the UK.

jabird

22nd Mar 2013, 19:54

Remind me again how much VAT is charged to ferry, rail and bus passengers?

None

How much subsidy does a rail operator get?

Too much, but that's for PTDRuNe. They are different modes, so you can't always compare like with like. Rail and bus have traditionally been subsidised (including via free passes) because they are deemed to be "socially useful", and they (most of the time) help to reduce traffic in our congested cities.

The same argument is used for some PSO routes in the Highlands, which are also exempt from APD.

Are flights "socially useful" - yes, of course they are, but they also come with social and environmental costs, and successive governments have deemed these costs as justification for APD in the first place, and then for increasing it.

I can guarantee it is a damned sight more than any airline would ever even dream of getting.

The problem is that the airline industry is up against a powerful green lobby. If I may say so, I count myself as being sympathetic to both arguments, but bearing in mind that this is PPRUNE, I'm not surprised to find myself the only one defending APD.

Now just remember what FoE & Co are saying -they say the airline industry IS subsidised to the tune of £10bn per year, and they say this is due to the "exemptions" airlines get by not paying VAT on fuel or aircraft (as if they wouldn't claim it back) or air tickets and so on.

Now I should make it clear that I don't buy this argument because I don't think you can label something that isn't taxed as a subsidy - any more than you can call a removal of benefit due to room occupancy a "tax" - but hey, that's another one for Jet Blast.

However, where I think the anti-aviation lobby do have a point is that for all this talk of business flights (~20% of the market), the rest of the market is stacked more towards UK residents flying out than it is towards visitors coming in. Of course APD is a deterrent to visitors, but it is also more likely to put people off from flying abroad, and that seems to be either ignored, or massively downplayed in any of the articles on this subject.

In the case of the Telegraph article - yes, the Caribbean is suffering, and as I have family out there, I have heard the cries. On the other hand, there are other internal reasons there which can explain the drop in tourism, and the UK government's prime purpose has to be to look after UK plc.

So is APD perfect? Far from it. Is it fair? Name me a tax that is.

The airline industry asking for an all out scrappage of this tax is just like residents living near an airport fighting expansion - politicians just see a bunch of turkeys voting against Christmas.

I'm sure there's a Laffer curve argument which would say further rises in APD, for all the reasons mentioned above, would be counter-productive. However, I suggest that scrapping it entirely would be equally so. Where is the middle ground?

CelticRambler

23rd Mar 2013, 11:25

I would consider myself part of the "environmental lobby" in a non-militant fashion and I believe the environmental impact of aviation is greatly overstated. I've seen a few studies comparing rail and road (coach) transport and the "green" credentials of the former appear to be more myth than reality. Road/rail vs. air regularly gives victory to the terrestrial mode, but there are so many parameters that can be considered and/or disregarded according to which side is presenting the argument, I don't think there is a clear advantage on either side.

That said, on this forum at least, it seems there is general agreement that there is no longer any pretence that APD is anything other than an "ordinary" transport tax, comparable (up to a point) with fuel excise duty.

Not anymore as APD was dropped from Belfast or reduced in line with ROI. If there is still people using DUB its by choice and TBH I can't blame them if its BFS or DUB as a choice.

From AirportWatch | More Northern Ireland residents using Dublin Airport (http://www.airportwatch.org.uk/?p=1213)
New figures from the Dublin Airport Authority show more than 500,000 Northern Ireland residents used Dublin Airport last year, a 15% increase on 2011. The number of Northern Ireland-based passengers using Dublin Airport has almost doubled since 2010 – the vast majority (70%) for holidays or leisure trips – and only 20% for business. The effect of Air Passenger Duty is not mentioned, as it is only £13 for short haul journeys, and has been removed from longer journeys from Northern Ireland. The Irish flight tax is only €3 per flight (it was higher till 2011). Dublin airport says the new road network has made travelling from Northern Ireland to Dublin faster and easier. In 2011 Dublin airport had around 18.7 million passengers, Belfast International had about 4.1 million and Belfast City airport around 2.4 million.

radeng

23rd Mar 2013, 14:49

Another 'minor point' is that it hits the economy by increasing the cost of travel abroad for business purposes, increasing business costs and thus making UK business less competitive.

Another reason for me giving up working and living on my pensions....

Heathrow Harry

24th Mar 2013, 15:05

a few quid on APD does not make UK Business "uncompetitive"

people could always travel in the back or in stay in a less plush hotel if they were really worried

radeng

24th Mar 2013, 15:53

Harry,

APD is a significant cost for my customers - because I travel so much.

>people could always travel in the back or in stay in a less plush hotel if they were really worried<

Obviously you don't travel on business. Why should people travelling on business have to rough it for a very dubious ecological argument?

jabird

24th Mar 2013, 16:49

Why should people travelling on business have to rough it for a very dubious ecological argument

The environmental impacts of flying are not dubious. Let's say air travel was more efficient than rail (you can always find examples when it will be, but this is not the norm) - the distance travelled by each trip is significantly larger than the average rail trip, or even the average trip by high speed rail.

So there is always going to be an argument to reduce the impact of aviation, and to do so through taxation, whatever the other impacts might be.

Now if APD was VAT, businesses could at least claim it back, but as VAT can't be charged on international air tickets, business can't claim it back.

There have been calls to exempt business tickets (based on the status of the consumer, not class of travel) from APD, together with those used by charities (and presumably government too). Question is - how could you do this, and would it be worth the admin hassle?

MG23

24th Mar 2013, 18:54

a few quid on APD does not make UK Business "uncompetitive"

That's what the government always says about new taxes, until the day they discover there's no-one left to tax.

A few quid here, a few quid there, and pretty soon you're talking 'why not shift our UK operation to China and save a ton of cash?'

radeng

24th Mar 2013, 22:27

In my case, it's another argument to stop working, stop paying 40% tax, and stop bringing a taxable income at 40% of over £80,000 a year into the UK from abroad - for ONE person.

I'll live happily on my £32,000 a year from pensions, rather than work - with a wife 13 years younger getting over £60,000 a year, we might manage! It's not so good for the country me stopping work, but that's their hard luck for a stupid punitive tax system.

jabird

24th Mar 2013, 23:21

Radeng,

Given what you've just said, I'm sure you are very well aware that the government decided it wasn't worth keeping the 50% tax rate for reasons very similar to what you are saying. They worked out that for every extra £1 in tax, another £1 was being lost through people like yourself deciding not to work, to work less, or to use various tax avoidance schemes.

The treasury has looked at APD, and so have chancellors past and present. The decisions they made were to introduce it, then to increase it, then reduce it, then increase it back to where it was, and then to taper it up further.

If other European countries generally considered greener than ourselves (Norway, Denmark) have decided to put the environmental arguments to one side and scrap their taxes, rather than merely labelling this tax "punitive", you have to ask why the UK hasn't done likewise?

The Dutch are no fools when it comes to the environment either, but we cannot just say "these places have all scrapped their APD, so we should too", without looking at other factors which come into play, namely (1) we have no land border with Europe (but unlike Ireland, we do have a sizeable domestic market) and (2) we have a substantial tourism deficit.

In 2011, £51bn was spent by Brits outside the UK, and £36bn was spent by visitors to the UK - a deficit of £15bn, around 85% of which is attributable to air travel.

Now I could accept the argument that APD has a greater impact on foreign visitors (who are shopping around between different countries, and may have lower disposable incomes), but unfortunately, the figures don't seem to bear that out. Since 2008, the economic situation has combined with APD to slash this deficit from a peak of ~£20bn.

Now if you can argue that there are other factors which are more influential, and if you can still create a case that each extra £1 in APD loses more than it brings in, then I'm sure Gideon would be pleased to hear it in time for his penultimate budget.

However, in order to do so, there needs to be a MASSIVE difference in the perception of costs relative to incomes, AND they need to be viewing APD as something that is over and above anything else seen as part of "rip off Britain".

Looking at the top 10 sources of visitors to the UK for 2010, 8 are EU states of which 7 are "old" EU (although Spain and Ireland are included in that), and the other 2 are the USA and Australia.

US visitors to the UK are worth the most, and obviously they are taking a fair hit on APD, but I suspect they will still get reasonable value out of flights to the UK, given we have about 40% of the Europe-USA market.

But APD is a two way process, so harsh though it might sound, a family spending a long weekend in Disneyland Paris, instead of two weeks in Florida, is still better for UK BOP.

So really, the environmental argument and the fact that government wants to raise revenue could both be trumped if you could counter the balance of payment argument. This might be more powerful for the longer haul variants of APD than for the European level, which our friends at Airport Watch say is "just" £12.

In the meantime, it is all very well having a go at "loony lefties", but the right cannot just ask for lower taxes without showing why it is in HMRC's interest to reduce them, especially when they will still be countered (perhaps not in the same breath) by greenies and even motorists who point out there is no tax on fuel and no VAT on airline tickets. And those same voices from the right that have asked for tighter border controls (much needed after the free-for-all I know) might now be finding that it is these restrictions - especially the long process of applying for UK visas - that are as much as a deterrent to people from the emerging markets as APD is.

James 1077

25th Mar 2013, 08:19

In terms of costs versus the amounts raised my experience is that we haven't had a trip back to the UK to see family for some time now - the main one being costs. This year my wife and kids are flying into France and holidaying there - with her parents taking the ferry over to see them. Three weeks of tourism spending will be going to the French government coffers rather than the British - pretty much entirely due to APD.

I know that you can't draw conclusions from one experience, but we won't be holidaying in the UK again, unless the cost comes down.

ExXB

25th Mar 2013, 09:16

I've seen multiple comments that APD isn't related to the environment. But who says it is?

I recall that when it was brought in ( by a different minister from a different political party from a different government) the environment was one of the excuses, but didn't they quickly drop that as it just made them look stupid.

Has any politician made this claim recently?

radeng

25th Mar 2013, 11:36

As soon as you equate time and money, air travel becomes necessary. Rail to Prague, Berlin, Nice or Venice takes far too long, even though it's more pleasant.

Much easier to avoid tax by not working..........not quite what the government want, though.

Trossie

27th Mar 2013, 09:28

A lot of rubbish is spoken on this topic.

First: APD is not a 'green' tax, it is simply just a tax.

Second: All transport pollutes in some way. Air transport (also a form of public transport) pollutes a lot less than the 'greenie/lefties' make out. In many cases it holds its own very well against rail travel and in many cases it is a lot less polluting, such as the large number of trains that travel long distances with low load factors or high-speed trains which are extremely energy consuming (something that the HS2 supporters are rather quiet on!) If one wanted to put things into a proper context, it would be better in total energy consumption terms for a family of four to fly away on holiday to the Mediterranean for two weeks in winter and leave their heating at home turned down to 'frost protection' levels. But then, this has nothing to do with APD which is just a tax.

Third: APD is an unfair tax as it is levied on one form of public transport only. There is no such Duty on any other form of public transport.

Fourth: All other forms of public transport get subsidies in some way or other. Air (Public!) Transport is totally self-funding and has to cover the costs for all its required infrastructure itself. No other form of public transport would be able to survive that way. Yet on top of this Air (Public!) Transport has a punitive APD levied on it.

Fifth: There is no VAT on air tickets, but there is also no VAT on your other public transport tickets.

Sixth: Airlines pay VAT on all fuel for domestic flights. Yes, it can be 'claimed back', but so can VAT on fuel be claimed back by every other form of public transport (as can any VAT be claimed by any business of any sort).

Seventh (and most importantly): APD is seriously damaging an industry that is vital to the economy in general. Look at how much came to a grinding halt when there was a bit of volcanic ash floating around, with, for example, factories having to stop production when hi-tech components couldn't be air-freighted in. Transport of all forms is the 'arteries' of any economy. Air transport is a vital part of any modern economy. Trying to damage it is only the sort of foolish idea that you can get from mindless 'greenies/lefties'. Modern transport forms like air transport are a vital part of any modern economy (and if you want to get onto 'environmental' terms, modern economies are a lot less polluting than more backward economies such as the old Eastern-Bloc or the era when coal-fired steam-powered transport was prevalent).

Finally: APD is an unfair, discriminatory and stupid tax. (But then what would one expect from politicians and bureaucrats? One has to raise the revenue for their posh pensions and duck houses somehow!)

deltahotel

27th Mar 2013, 12:42

If I could be persuaded that every penny raised by APD went to the environment (carbon reduction, wave power, more efficient boilers/insulation etc etc whatever) then I might have a small amount of sympathy for it. I don't believe it does and is just another (yet another) revenue raising exercise.

If APD has little or no net value (costing more to administrate than it raises or, more likely, encouraging people to spend money in other countries) then it seems pointless or worse.

Anyone got any figures?

mushroom69

27th Mar 2013, 18:57

Unless I have been completely tricked with an April fools joke, THIS is the new table for ADP! You are all talking about airlines, but

From 1 April 2013, Air Passenger Duty (APD) has been extended to include private jets and other smaller aircraft. This means that if you operate an aircraft with an authorised take off weight of 5.7 tonnes or more, which takes off from a UK airport carrying chargeable passengers, you will be required to register for APD within 7 days of the flight occurring, and account for APD.

Bands(approximate distance in miles from the UK) Reduced rate (lowest class of travel) Standard rates[3](other than the lowest class of travel) Higher rate[4] From 1 April 2011 From 1 April 2012 From 1 April 2013 From 1 April 2011 From 1 April 2012 From 1 April 2013 From 01 April 2013 Band A (0-2,000) £12 £13 £13 £24 £26 £26 £52 Band B (2,001-4,000) £60 £65 £67 £120 £130 £134 £268 Band C (4,001-6,000) £75 £81 £83 £150 £162 £166 £332 Band D (over 6,000) £85 £92 £94 £170 £184 £188 £376So on our Cl604, each passenger has now to pay GBP332 for the same distance as an easyJet passenger paying GBP83 That final column is over 20 tons, less than 19 passengers..... So if i buy a BBJ and have 20 seats, it becomes a regular pax jet at the lower rates. Go figure. So 10 pax on the 604 will have to add GBP2680 to the trip to Dubai..... while if an airline flies with 10 pax on a bad day, they pay GBP600......
This will cost jobs, operators and create a ripple effect throughout the economy, aircraft are sold (final straw) resulting in fewer aircraft being maintained, based, money being spent by crews etc. This is going to cost the economy as a whole!:ugh:

jabird

28th Mar 2013, 01:11

mushroom,

each passenger has now to pay GBP332 for the same distance as an easyJet passenger paying GBP83

There is no April fools joke. This is just bringing in APD for business jets, an exemption that has previously been seen as extremely unfair for the lion's share of passengers who fly scheduled or charter.

Quite odd that you'd quote such a tax for an Easyjet passenger when that's only for 4000 miles +, and almost the entire Easyjet network falls within the lower (European, inc afaik Morocco and all of Turkey) bracket.

Even if I take your like for like comparison, the business jet is exactly 4x the easyjet. Given that an element of APD is indeed a green tax (contrary to the unsubstantiated claims above), that sounds proportional to me, given that I'd expect more space on a bizjet, and therefore far greater fuel burn per passenger.

Of course business jets, by virtue of their name bring business, but so do conventional commercial aircraft (in all classes), but as they bring, so they take, hence one more reason why the tax exists.

jabird

28th Mar 2013, 01:42

A lot of rubbish is spoken on this topic.

Well if you had one of these "greeny/lefties" you love to hate reading this thread, or even, dare I say it, a politician, they'd probably shout the same back at you. Even regular punters might not like paying APD, but they still tend to accept that it is one more tax to pay, just like all the others.

First: APD is not a 'green' tax, it is simply just a tax.

Or it is BOTH. HMRC want the cash, and it could be argued that it is a Pigovian tax to discourage an activity which has environmental dis-benefits, even if it is a blunt one at that.

the large number of trains that travel long distances with low load factors

Trains with the lowest LF tend to be tube & commuter trains maintaining fixed headways (eg 3/hour) throughout the day, even though demand has several peaks and troughs.

When you compare air v rail for load factor, even if air is twice as high, trains are still far more efficient at moving the seats around, and so much energy goes in the taxi, climb & descent phase of the air journey that the train still wins the green game.

high-speed trains which are extremely energy consuming (something that the HS2 supporters are rather quiet on!

Amazing how often the same pro & anti arguments just get flipped in to reverse when the mode of transport changes!

The challenge with HS2 is it will bring in a lot of new traffic to the market, cancelling out a lot of the efficiency savings brought in through replacing car journeys.

HS2 will have minimal impact on domestic air, but I think that's one for other / previous threads.

it would be better in total energy consumption terms for a family of four to fly away on holiday to the Mediterranean for two weeks in winter

No it wouldn't - and you said there was a lot of crap on this thread, well there you go!

Where is your evidence to back up such a silly claim?

APD is an unfair tax as it is levied on one form of public transport only. There is no such Duty on any other form of public transport.

Different transport modes do different things, so you can't always compare like with like. Same myth "pedalled" by people who say cycling and driving cars are both forms of private transport, so bikes should pay "road tax" - completely forgetting that there's neither the mechanism nor the need (as VED is also a pollution charge) to do so.

Air (Public!) Transport is totally self-funding

Not always - see PSO routes & Highlands above.

Airlines pay VAT on all fuel for domestic flights. Yes, it can be 'claimed back

So they don't pay it, and nor do the passengers, whether travelling on business or pleasure. Now the same question is asked of motorists driving, let's say, from London to Scotland. They use their car, they pay duty and then VAT on top of the duty. They let someone else drive by taking public transport (and you rightly call the plane public transport), and there is no duty or VAT in the case of the plane or an electric train. AFAIK, a diesel train or coach would pay the "red" duty rate?

Look at how much came to a grinding halt when there was a bit of volcanic ash floating around, with, for example, factories having to stop production when hi-tech components couldn't be air-freighted in.

The same argument was used by the green lobby, who said we are too dependent on air travel, especially for "just in time" production models and fresh food.

If APD has little or no net value (costing more to administrate than it raises or,.

I very much doubt it. Small shops still sell numerous low value products which are Vatable and it is all accounted for. APD is included in the online booking process, why should it cost any more to administer than, say, airport charges, which are often around the same amount for a European journey.

more likely, encouraging people to spend money in other countries) then it seems pointless or worse

Err, this is getting rather tedious now. Of course APD encourages people who are thinking of visiting the UK to spend money in other countries - that is not in dispute. The problem is, not having any taxes just makes it easier for Brits to spend money abroad.

So there's nothing pointless to it at all - you might not like APD, of course the industry hates it, but without addressing the tourism deficit, complaints to politicians will just fall on deaf ears.

Anyone got any figures?

See tourism deficit figures above - roughly for each £1 spent by inbound visitors, £1.40 spent elsewhere by Brits.

Rather than try and pretend this deficit doesn't exist, the only way to challenge APD is to show that increasing it further means a much steeper impact on inbound visitors than it does on outbound. I've yet to see evidence that this is the case.

Otherwise, the only other challenge to APD is a wider philosophical one - and that is that even if there is a deficit on the tourism, there are other deficits in other industries, which are also untaxed, or even subsidised - such as food production. Therefore, by this logic, to deliberately skew APD against non-European countries is taking us back to the 1930s tariffs. It would be countered that the higher rates are due to emmissions being higher on these flights, so either way, the HMRC still gets your cash.

Trossie

28th Mar 2013, 07:17

'jabird', you are sprouting off a lot of opinion and trying to make it sound like 'fact'. All of the points that you try to make could easily be pulled apart by referenced facts, but it wouldn't be worth the effort because your blinkered mind has been made up anyway. You must be one of those public sector bureaucrats who needs that posh pension funded or an MP who needs a duck-house funded, that's why you are so adamant about stealing peoples' earnings in tax.

APD is not a 'green' tax, nor is any element of it, as none of it is ring-fenced for environmental issues -- it all just goes into the same pot that has been helping fund those posh public sector pensions and MPs' duck-houses.

APD is an unfair tax.

APD is bad for the economy and jobs.

APD is a stupid tax that other more sensible countries have abolished.

mushroom69

28th Mar 2013, 07:24

There is no April fools joke. This is just bringing in APD for business jets, an exemption that has previously been seen as extremely unfair for the lion's share of passengers who fly scheduled or charter.

So this "extremely unfair" we can make up for by charging these passengers 4 times what the other passengers pay per person and then they will feel vindicated somehow? A special tax on these pricks who don´t have to Q up a couple hours beforehand.......we´ll show them.

Quite odd that you'd quote such a tax for an Easyjet passenger when that's only for 4000 miles +, and almost the entire Easyjet network falls within the lower (European, inc afaik Morocco and all of Turkey) bracket.

It is not odd at all. I just used easyJet as "an airline." This is an interesting line of argument, that rather than the point of "an airline," (I should have then said BA for example) you go after an irrelevant point. So who cares which airline. Ja ja.....OK....I grabbed the wrong one.:eek:

Even if I take your like for like comparison, the business jet is exactly 4x the easyjet. Given that an element of APD is indeed a green tax (contrary to the unsubstantiated claims above), that sounds proportional to me, given that I'd expect more space on a bizjet, and therefore far greater fuel burn per passenger.

Like most of the so-called green taxes, it is primarily tax and far less so green. And like the entire EU carbon trading fiasco, the UK feels that it can tax people depending on how far away they fly? So most of a 4000nm trip is far outside UK airspace, but the UK is taxing this flight on what grounds exactly? Are they then going to look at the destinations and send a proportion to each overflown country, as these people had the burden of these UK originating passengers flying over their heads? No. And if this inspires other countries (God forbid) then they can also add 388 GBP for the return and these horrible people able to again skip the Q, can pay more than the other people flying cattle class pay for their entire ticket!!!! Just in tax! That will really show them! Hey! As glass windows are not the best insulation, why not have a window tax (it has been done by the GB authorities before, in Ireland) and even better......we can send inspectors out to check the views out of the windows of each house. If the view is pleasant, like from a wealthy person´s house, then we can tax them on the value of their view as well..... This we can pass off as "green," as the windows don´t insulate as well as a wall does and we add the view tax to demonstrate once again, that we cannot tolerate someone else having any sort of advantage over average. "They have more space, indeed!

Of course business jets, by virtue of their name bring business, but so do conventional commercial aircraft (in all classes), but as they bring, so they take, hence one more reason why the tax exists.

I am speechless on this one

:mad: