Friday Focus -- Write To Reply
Fri, 2 Jul 2010
Points of view on the proposed plan to replace the per-passenger tax with a per-plane levy
The question mark over the government’s per-plane tax has led to much discussion within the freight and logistics industry. Here, in IFW’s Write to Reply, ABTA Chief Executive Mark Tanzer and Matthew Marriott, Commercial Director of Hellmann Worldwide Logistics, exchange emails outlining their position on the proposed tax.
Dear Mr Tanzer,
I’m writing to express my concern over the recent announcement on the new per-plane tax. As the Commercial Director of a worldwide logistics operation, you can no doubt understand how the addition of extra cost, in any way, shape or form, would impact us as an organisation, and also our customers.
While a final decision is yet to be made and the impact to British industry isn’t yet 100% clear, I can’t help but think this might be a slightly misleading way to introduce another surcharge. The travel industry is still suffering the effects of the volcanic ash explosion and it appears as though the old government’s predictions on the recovery of the economy were a little optimistic, so introducing additional costs would surely be risky?
We’re running the risk of seeing airlines operating fewer flights, which, in turn, would impact on air freight forwarding for the logistics and manufacturing industries and last-minute bargain holidays for the consumer. Do we really want to add another surcharge to those for baggage, fuel, reserved seats, food and freight?
My concern is that by putting up prices in the airline industry, we’ll risk driving money out of it. It seems bizarre that exports, the one thing that appears to be supporting the economy, will be exposed before we’ve seen any green shoots in other areas of UK industry.
Matthew Marriott
Dear Mr Marriott,
No tax on travel is welcome, but a per-plane tax would not represent a totally a new tax on flying for our members and their customers who have had to pay Air Passenger Duty since its introduction in 1994. Over the past 16 years, successive administrations have consistently increased APD, often with the spurious justification that it is a green tax. In reality, APD perversely rewards airlines flying with low load factors and takes no account of the levels of carbon emitted by individual aircraft.
In our manifesto, ABTA called for a per-plane tax (PPD) to replace APD because we were not naïve enough to think that in the current economic climate, the government would look to wholly scrap any tax, even though we agree that the economic damage caused by taxing flying far outweighs the tax revenue it raises. This was recognised by the Dutch government in 2009 when it abolished their equivalent of APD.
PPD is a much fairer tax and would incentivise airlines to fly with higher load factors as well as investing in newer aircraft with significant environmental benefits, both in terms of reduced emissions and lower levels of noise pollution, which will help immensely in our argument for further airport expansion.
PPD is not perfect, but it is a considerable improvement on APD. We are waiting to see exactly how it will be implemented and at what level. However, in 2012, when aviation joins the EU’s Emission Trading Scheme, ABTA believes that there can be no satisfactory justification for retaining PPD and we expect it to be withdrawn.
Mark Tanzer
Dear Mr Tanzer,
Thank you for your point of view. I understand your comments regarding APD and can resonate with your feelings, especially along the environmental lines. While I can see, from your perspective, that PPD is an improvement on APD, my concern lies with protecting the already fragile UK economy and jobs.
The introduction of a new aviation tax could seriously damage the freight industry by penalising aircraft that fly via the UK en route to their final destination. The danger we face is excluding the UK (especially Heathrow) from a fiercely competitive international market and damaging the supply chain of goods needed to help the economy thrive again.
If the economy continues to suffer, more jobs will be lost at a time when we need to be creating them, more organisations will incur redundancy pay outs and the hope of returning to a prosperous market will fade.
Yes, less aircraft will be used so the environmental benefits are more favourable, but this will drive other costs up. It will impact both passenger and freight costs and will add further expense to the customers of the airline industry in terms of surcharges. The impact of further taxation will affect export companies and, unfortunately, the lower levels of capacity will result in prices going up. I would like to find out more about the calculation models the airlines will be basing the new taxation on. This is something I’d like to see put into the public domain.
The good news last week from the Chancellor, however, was that the government is still discussing its options, so it will be interesting to see what the changes in aviation tax will be later in the year. Until then, let’s hope the economy shows signs of picking up, and, further down the line, I echo your thoughts on PPD joining APD and hope for a solution that benefits all to be announced.
Matthew Marriott
Dear Mr Marriott,
Although I sympathise with your position concerning the possible negative effects of PPD on the air freight sector, we believe it is still a fairer form of taxation than APD, which the travel and tourism sector has had to contend with for the last 16 years. It makes no sense that the higher the load factor and the lower the environmental impact per passenger, the higher the tax take per aircraft.
The current economic climate makes it very unlikely that the government will seek to remove a source of revenue, so if aviation is to be taxed it is reasonable that this should apply to all sectors rather than just passenger-carrying aircraft.
Chancellor George Osbourne recently said he will reveal details of the replacement for APD in September. ABTA feels strongly that this creates an unnecessary degree of uncertainty and wants the government to publish its consultation on the options for APD before Parliament breaks for its summer recess on 29 July.
This is a matter of fundamental importance and it is vital that the government gets the balance and structure of a new tax right, and doesn’t waste this opportunity to replace a largely unjustifiable tax with one that is fairer and more logically constructed.
Mark Tanzer
Dear Mr Tanzer,
I’m writing to express my concern over the recent announcement on the new per-plane tax. As the Commercial Director of a worldwide logistics operation, you can no doubt understand how the addition of extra cost, in any way, shape or form, would impact us as an organisation, and also our customers.
While a final decision is yet to be made and the impact to British industry isn’t yet 100% clear, I can’t help but think this might be a slightly misleading way to introduce another surcharge. The travel industry is still suffering the effects of the volcanic ash explosion and it appears as though the old government’s predictions on the recovery of the economy were a little optimistic, so introducing additional costs would surely be risky?
We’re running the risk of seeing airlines operating fewer flights, which, in turn, would impact on air freight forwarding for the logistics and manufacturing industries and last-minute bargain holidays for the consumer. Do we really want to add another surcharge to those for baggage, fuel, reserved seats, food and freight?
My concern is that by putting up prices in the airline industry, we’ll risk driving money out of it. It seems bizarre that exports, the one thing that appears to be supporting the economy, will be exposed before we’ve seen any green shoots in other areas of UK industry.
Matthew Marriott
Dear Mr Marriott,
No tax on travel is welcome, but a per-plane tax would not represent a totally a new tax on flying for our members and their customers who have had to pay Air Passenger Duty since its introduction in 1994. Over the past 16 years, successive administrations have consistently increased APD, often with the spurious justification that it is a green tax. In reality, APD perversely rewards airlines flying with low load factors and takes no account of the levels of carbon emitted by individual aircraft.
In our manifesto, ABTA called for a per-plane tax (PPD) to replace APD because we were not naïve enough to think that in the current economic climate, the government would look to wholly scrap any tax, even though we agree that the economic damage caused by taxing flying far outweighs the tax revenue it raises. This was recognised by the Dutch government in 2009 when it abolished their equivalent of APD.
PPD is a much fairer tax and would incentivise airlines to fly with higher load factors as well as investing in newer aircraft with significant environmental benefits, both in terms of reduced emissions and lower levels of noise pollution, which will help immensely in our argument for further airport expansion.
PPD is not perfect, but it is a considerable improvement on APD. We are waiting to see exactly how it will be implemented and at what level. However, in 2012, when aviation joins the EU’s Emission Trading Scheme, ABTA believes that there can be no satisfactory justification for retaining PPD and we expect it to be withdrawn.
Mark Tanzer
Dear Mr Tanzer,
Thank you for your point of view. I understand your comments regarding APD and can resonate with your feelings, especially along the environmental lines. While I can see, from your perspective, that PPD is an improvement on APD, my concern lies with protecting the already fragile UK economy and jobs.
The introduction of a new aviation tax could seriously damage the freight industry by penalising aircraft that fly via the UK en route to their final destination. The danger we face is excluding the UK (especially Heathrow) from a fiercely competitive international market and damaging the supply chain of goods needed to help the economy thrive again.
If the economy continues to suffer, more jobs will be lost at a time when we need to be creating them, more organisations will incur redundancy pay outs and the hope of returning to a prosperous market will fade.
Yes, less aircraft will be used so the environmental benefits are more favourable, but this will drive other costs up. It will impact both passenger and freight costs and will add further expense to the customers of the airline industry in terms of surcharges. The impact of further taxation will affect export companies and, unfortunately, the lower levels of capacity will result in prices going up. I would like to find out more about the calculation models the airlines will be basing the new taxation on. This is something I’d like to see put into the public domain.
The good news last week from the Chancellor, however, was that the government is still discussing its options, so it will be interesting to see what the changes in aviation tax will be later in the year. Until then, let’s hope the economy shows signs of picking up, and, further down the line, I echo your thoughts on PPD joining APD and hope for a solution that benefits all to be announced.
Matthew Marriott
Dear Mr Marriott,
Although I sympathise with your position concerning the possible negative effects of PPD on the air freight sector, we believe it is still a fairer form of taxation than APD, which the travel and tourism sector has had to contend with for the last 16 years. It makes no sense that the higher the load factor and the lower the environmental impact per passenger, the higher the tax take per aircraft.
The current economic climate makes it very unlikely that the government will seek to remove a source of revenue, so if aviation is to be taxed it is reasonable that this should apply to all sectors rather than just passenger-carrying aircraft.
Chancellor George Osbourne recently said he will reveal details of the replacement for APD in September. ABTA feels strongly that this creates an unnecessary degree of uncertainty and wants the government to publish its consultation on the options for APD before Parliament breaks for its summer recess on 29 July.
This is a matter of fundamental importance and it is vital that the government gets the balance and structure of a new tax right, and doesn’t waste this opportunity to replace a largely unjustifiable tax with one that is fairer and more logically constructed.
Mark Tanzer
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