UK BUDGET Government 'open to changing the definition' of new air tax

UK BUDGET Government 'open to changing the definition' of new air tax

	Published : Wed, 21 Mar 2007 16:14 By : Agencies Print this Story

LONDON (AFX) - The UK government is 'open to changing the definition' of Air Passenger Duty (APD), according to the Treasury's full report on the 2007 Budget speech, which was made earlier today by the Chancellor Gordon Brown.

'The aviation industry has suggested to government that the way in which Air Passenger Duty defines different classes of travel may not always send the appropriate environmental signal and may cause market distortions, for example for 'business class only' flights and 'premium economy'-type seats,' the report said.

'The government is open to introducing changes to the definition, but only if it can be done on a broadly revenue neutral basis. The government will discuss further with industry how this can be achieved,' it added.

A Treasury spokeswoman this afternoon told AFX News that 'no timeframe has yet been placed on the discussions which will take place between the government and the [aviation] industry about the possible change of the definition of APD'.

In his pre-budget report in December 2006, Brown said APD rates would increase from Feb 1 2007.

Short-haul passengers in the lowest class of travel must now pay 10 stg, up from 5 stg, and in other classes they have to pay pay 20 stg, up from 10 stg. Long-haul passengers in the lowest class of travel now pay 40 stg, up from 20 stg, and in others they pay 80 stg, up from 40 stg.

Low-cost airlines claim long-haul customers are being unfairly penalised because such airlines offer the opportunity to have a service, slightly above economy class, with extra leg room, which has proved popular with tall people. Passengers who opt for this service now have to stump up the 80 stg tax.

Brown has said the extra tax is designed to combat global warming, but some airlines, including low-cost-carriers Ryanair and easyJet, have described it as just another way of raising revenue for the Treasury.

The full 2007 budget report report stands by Brown's initial claims that APD will deliver substantial climate change savings, however.

'The government believes that air passenger duty plays a valuable role in ensuring that passengers understand and acknowledge the environmental costs of their actions,' the report said.

'The resultant behaviour change can deliver significant climate change benefits: the decision announced in the 2006 Pre-Budget Report to increase the rates of air passenger duty from 1 Feb 2007 will deliver climate change savings equivalent to around 0.75 MtC [million tonnes of carbon] per year by 2010-11.'

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