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Tax ?

Old 10th Nov 2006, 21:49
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Tax ?

OK, now here is a question for you, and I will try and keep it legal.

Tax is levied as a percentage of the cost of the goods/ service paid for. FACT.

So, when an Airline charges you .99p for a ticket from A to B, the tax should be x% of .99p no ?

So, If LoCo airlines can fly me from A to B for 99p, why is the tax £45 ? As a percentage it is WAY above the legal amount chargeable.

In consultation with an ex colleague who works for HM Revenus an Customs, responsible for the collection of such taxes, he just smiled whe I suggested that the great unwashed were being ripped off.

So, who is going to ask the question of the Chancellor ?
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Old 10th Nov 2006, 21:59
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Tez.

Nice idea, however HMG can levy tax in more than one way.

Yes, there is the percentage method, but there is also the "per item" method.

I'm sure this has all been checked very thoroughly for legality.

As for whether the public are being ripped off, that depends on your outlook. If you accept that people want more money spent on public services (healt, education etc.) then that money has to come from somewhere. The only place it CAN come from (sustainably anyway) is to tax the populace.

You might well suggest that we don't get very good VALUE for our money, but that's a whole other thread!
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Old 10th Nov 2006, 22:04
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subsidy?

I would suggest that this is because of the way we heavily subsidize air travel in general as a population.
One such annoyance is flying to BFS opposed to BHD with its ridiculously hiked tax rate. Some might suggest that the money is an environmental tax because of noise but I'd guess it was more to do with the new terminal.
I nice link follows..
tax subsidy
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Old 12th Nov 2006, 03:42
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Originally Posted by mucatron
I nice link follows..
tax subsidy
Interesting concept - Friends of the earth object to there being no tax on aviation fuel . . . . .

So perhaps they would like UK to slap a tax on fuel, and thus have inbound aircraft tankering and thus burning more fuel
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Old 12th Nov 2006, 12:38
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Originally Posted by tezzer
Tax is levied as a percentage of the cost of the goods/ service paid for. FACT.
I wasn't aware that all taxes are calculated as percentages - do you mean that flat charges have a different name (levies etc)?

But more generally: the "add-ons" on a ticket are not accurately described as "tax".

I would suggest that another characteristic of a tax is that it is imposed by a government or a government agency, and the only part of the add-ons in a typical airline ticket which is imposed by government is (in the UK's case) the Air Passenger Duty, a flat charge.

The remaining parts of the add-on are typically (notional) landing fees, (arbitrary) fuel surcharges, (inflated) credit card charges, and so on. These are inherent parts of the airlines' cost base which they choose to split out in an effort to make the initial "headline" price more alluring, and have nothing to do with "tax" properly defined.

If you want to suggest that the add-ons to a fare (taxes, levies, charges etc.) are disproportionately large compared to the basic fare, I'd wholeheartedly agree with you. I hope that efforts being made by consumer bodies et al. to require airlines to show the "all in" price will make progress (I've no problem with the airlines showing a breakdown of their costs, fuel surcharges, landing fees etc., as long as they don't add these in after suckering people in with an unobtainable headline price).

C.
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Old 13th Nov 2006, 19:55
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Originally Posted by tezzer
Tax is levied as a percentage of the cost of the goods/ service paid for. FACT.
Well, I'd like to see some backing for this assertion of "FACT".

In any case, I'd start by pointing out the FACT that the "taxes, fees and charges" you pay for your ticket include something called the "Air Passenger Duty". If you want to be pedantic, it's not a tax but a duty. And it's still a flat rate.
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Old 14th Nov 2006, 15:01
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Interesting thread.

My question is, though, the following.

With 'certain' LoCo's (not sure if all but a fair bet) if you make a booking and then for any reason cancel this, you cannot get a 'refund'. All well and good. However, what happens to the tax????

If a customer pays a LoCo for a flight, they will hold onto the tax until the flight is carried out, whence they pay the tax people ie when the 'service' has been provided. If the flight is not utilised, the tax is not 'incurred' therefore it is not paid to the authorities. This then falls into the 'pot' of the airline UNLESS it is claimed back, and nowhere is it mentioned that customers can actually get this back (minus the '99p' fare of course!!!!).

With 'no shows' running in the high single digit % points, this must be a very substantial volume of money being held by the companies!
Therefore the question....'Should the public not be made aware of this practice?'

Thoughts and comments welcomed.
BD
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Old 14th Nov 2006, 16:02
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I believe that with most airlines you are normally allowed to claim the per passenger part of the "tax" charge back - less an admin fee for doing so.

As for "tax" being a percentage it is not always but also depends on how you define tax. My personal definition is any charge that is levied on goods / services by the government or by a government owned company.

In this way airline passenger duty is a tax (even though it is officially a duty) and is a fixed amount per person (ie 5 on most UK to EU low cost carriers).
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Old 15th Nov 2006, 19:53
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Originally Posted by Bob Down
With 'certain' LoCo's (not sure if all but a fair bet) if you make a booking and then for any reason cancel this, you cannot get a 'refund'. All well and good. However, what happens to the tax????
...
Therefore the question....'Should the public not be made aware of this practice?'
I believe that the airlines have to refund the tax on request if the sector is not flown, as they're not entitled to simply keep it for themselves. However, they are entitled to make an administrative charge to process the refund if the customer requests one. In many cases, this charge exceeds the amount of tax to be refunded, so nothing is left.

The airline is then pocketing your cash, but not because it's keeping the tax but because it's keeping the administrative charge that it's entitled to make.

And it's entitled to make that charge, of course, because it's part of the terms and conditions of your ticket.
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