UK Needs to Axe Air Passenger Duty

February 5, 2013 Taxation in UK

UK airlineLONDON – If the UK government wants to boost revenues and spur economic growth it should abolish the damaging taxes currently being levied on airline travel in the UK.

Four major airlines in the UK have banded together to release a joint report on January 4th on the potential benefits of scrapping the country’s Air Passenger Duty (APD), claiming that abolishing the tax could create over 60 000 jobs and could improve the economy of the UK by over GBP 500 million in 2013 alone.

The study was commissioned by Ryanair, easyJet, British Airways, and Virgin Atlantic, and was completed by researchers at the consulting firm PricewaterhouseCoopers.

According to the results in the report, dropping APD today would boost the national GDP by 0.46 percent by the end of the year, with further increases to be seen each year until 2020.

The drop would also create 60 000 more jobs in the UK, as airlines would invest greater amounts of capital into expanding their service networks, and operators in supporting industries also take on more staff to support the expansion.

Despite the drop in revenue arising from the loss of ADP, the government would still see a growth in overall tax revenues following abolishment Air Passenger Duties, as the increased activities after the removal of the tax would result in nearly GBP 500 million in extra tax receipts in the first year alone.

In comparison to other taxes currently seen in the UK, the ADP was regarded as being the most damaging, with the study claiming that every GBP 1 that a business can save on ADP will result in a GBP 0.59 increase in the national GDP.

Photo by @nightgolfer