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U.S. Travel Groups Blast U.K. Tax PlanNovember 8, 2011 By: George Dooley Travel Agent
Leading U.S. travel industry organizations offered a unified front to oppose the United Kingdom's plans to increase the Air Passenger Duty (APD) tax, calling it excessively high and counterproductive.
In a letter to George Osborne, the U.K.'s Chancellor of the Exchequer, a score of top agencies, associations and unions expressed strong opposition to the tax. "In particular, we are concerned that the APD amounts to a tax grab targeting airline passengers for the purpose of deficit reduction," the letter said. "We believe the ADP tax unfairly penalizes airlines and their customers."
"The adverse impact of the APD tax harms everyone. It punishes consumers, it harms foreign and U.K. airlines, it causes economic injury to countries and cities that welcome U.K. visitors arriving by air, and it hurts the U.K. hospitality and tourism industry by discouraging air travel to your country," the group said.
"We would note that similar proposals for an ADP in the Netherlands, Belgium, and Ireland were scrapped altogether after concluding that the harm to jobs and taxable economic activity would exceed ADP-related revenues raised by the tax. It is our hope that the U.K. will follow last year’s decision to not increase the APD rate," the group said.
"The APD tax significantly reduces demand for air transportation today, and any increase will worsen that situation. Demand for air services will inevitably suffer and that will create cascading injurious economic effects, which will undermine the efforts of Her Majesty’s Government to stimulate the economy."
"Currently, the APD is the largest tax passengers face anywhere in the world. Such a high tax negatively influences travel decisions of those contemplating travel from or to the U.K. We understand the government is considering increasing the existing APD rates by double the inflation rate, or approximately 10 percent. If such an increase occurs, a family of four flying from the U.K. to the United States would be faced with £260 in APD taxes, up from £80 in 2006. "
"A party of four business travelers in premium economy seats traveling to the United States would be faced with £520 in APD taxes, up from £160 in 2006. A 225 percent increase in taxes clearly impacts the propensity of individuals to travel by air, as has been evidenced by the well-documented decrease in traffic from U.K. airports, particularly when compared to other EU airports."
"Not only do the high APD tax levels affect the travel decisions of U.K. travelers, they also affect the decisions of potential travelers to the U.K. For example, a family of four from Florida considering vacationing in the U.K. would be faced with total APD taxes of about $419 at current exchange rates (up from $129 in 2006). Such a high tax amount clearly makes the U.K. a less desirable destination, ultimately depriving the U.K. economy of the substantial benefits that international visitors provide," the letter said.
The group said air transportation has for decades proven to be an indispensable engine of economic growth and that any increase in the APD tax will act as brake on that growth. "We respectfully request that the U.K. freeze the current APD tax rate as a prelude to a phase-out. We believe that there are more economically sound ways to reduce the U.K. budget deficit than strangling tourism and air-service trade between our two countries."
Signatories included unions such as the Air Line Pilots Association, trade associations such as the Air Transport Association, the American Society of Travel Agents, the Business Travel Coalition and the Global Business Travel Association. Other signers include destinations such as the Greater Phoenix Convention & Visitors Bureau and agencies such as Maritz Travel backed by the U.S. Chamber of Commerce and the U.S. Travel Association.