The Business Travel Coalition (BTC) blasted the United Kingdom's proposed Air Passenger Duty (APD) increase by nearly 10 percent with BTC chairman Kevin Mitchell warning of lost jobs, a weakened UK travel industry and loss of competitiveness.
The 8 percent APD takes effect in April and has gained widespread condemnation from the travel industry, including the World Travel and Tourism Council (WTTC).
"This decision this week to raise the Air Passenger Duty (APD) nearly 10 percent, and the admission that it is primarily for general revenue purposes, represents reckless governance in the extreme and is only made worse by the wholesale rejection of the travel industry's well-considered concerns," Mitchell said.
"The immediate consequence will be lost jobs; the longer-term fate of a substantially weakened UK travel and tourism industry as well as its global competitiveness is sealed," Mitchell said.
Mitchell noted that earlier this year, the BTC organized some 70 corporate travel departments, travel management companies and tour operators from around the world and transmitted a letter to George Osborne, Chancellor of the Exchequer and Michael Moore, Secretary of State for Scotland, urging a reduction in the APD.
"The duty had already become a burden on the competitiveness of the UK for meetings, incentive trips, conventions and tourism," Mitchell said.
Signatories to this letter cited by the BTC included Makino, Inc., from Japan, Dnata Travel Services from Dubai, Argo Travel from Greece, Qiagen Group from the Netherlands, Alfa Laval from Sweden, Travel Leaders from the U.S., Li & Fung Group from Hong Kong and UNIGLOBE Normark Travel Inc. from Canada.
"National economies have become more interlinked and these signatories are all negatively impacted by the onerous APD whether by reduced tourism to their countries or by the UK increasingly pricing itself out of the markets for meetings, incentive trips and conventions. They are indeed stakeholders in UK tax policy," Mitchell said.
"When the EU Emissions Trading System kicks in during 2012 - effectively taxing the UK twice for its role in 'protecting the environment,' the cumulative, negative impact on the UK and its external stakeholders will be orders of magnitude more grim," Mitchell said.
David Scowsill, president and CEO of the World Travel & Tourism Council (WTTC), also attacked the APD. “The announcement on APD is a missed opportunity to reform one the world’s most notorious tourism taxes. APD has always been a blunt instrument and a bad tax. Whether in its current per-passenger form or as a per-plane version, it is bad for the consumer and bad for the international competitiveness of the UK. APD does not go towards any aviation or transport projects; it provides no incentive for airlines to operate newer, cleaner aircraft or for the consumer to choose “greener” options."
"A bad tax was made even worse in 2009 with its discriminatory distance-based approach to long-haul destinations – for example, the Caribbean is closer to the UK than the U.S. West Coast yet it is in a higher (tax) band. The UK should learn from their neighbouring countries such as the Netherlands who repealed a $412 million departure tax because it cost the economy $1.6 billion," the WTTC said.
The WTTC noted that according to the U.K.'s Treasury’s own consultation aviation creates over 250,000 jobs directly, and supports an estimated 200,000 through the supply chain. It is also a principal artery for the wider Travel & Tourism industry which contributes £105 billion, or around 7 percent, of the UK’s GDP and supports 2.3 million jobs.
"It is time for a full cost/benefit analysis of APD to be undertaken to measure its contribution to the UK taxman against its damage to the wider UK economy in terms of job, competitiveness and GDP contribution," the WTTC said.