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Brown doubles tax on flights in effort to combat global warming
Last updated at 23:52pm on 01.12.06
Air passengers are to face higher taxes in a mini-Budget to be unveiled by Gordon Brown next week.
The Chancellor will announce increases in air passenger duty (APD) on Wednesday in an attempt to demonstrate that the Government is serious about tackling emissions linked to global warming.
A rise in vehicle excise duty on gas-guzzling 4 x 4 vehicles is also expected.
Industry insiders believe the Chancellor will double the levy on short-haul flights - adding between £5 and £10 to the cost of a typical flight to Europe.
Doubling the tax on long-haul flights would add around £40 to the cost of a typical flight to the United States.
But Mr Brown is thought to have decided that would be too punitive, so a smaller increase on long-haul flights is expected.
The idea of environmental levies on flying was backed yesterday by a major report on the future of transport commissioned by the government from former British Airways chief Sir Rod Eddington.
But the Chancellor is treading a fine line between pricing passengers off aircraft - which could be hugely politically damaging - and the need to take on Tory leader David Cameron on the environment.
An all-out attack on cheap flights would provoke an unwanted confrontation with budget carriers.
However, some airlines are likely to oppose any rise at all. Michael O'Leary, chief executive of Ryanair, recently called the idea of raising taxes to protect the environment "horse s***".
Currently, air passenger duty brings in just under £1 billion a year to Treasury coffers. Doubling it would bring in useful extra revenue and would increase the cost of the average return fare by around five per cent.
Experts predict that would correspondingly reduce the demand for air travel by around the same proportion - five per cent.
The Chancellor believes the price of tickets must take account of the carbon emissions produced by the fast-growing airline industry.
A major review of climate change policy carried out for the Government has concluded the aviation industry accounts for 1.6 per cent of greenhouse gas emissions and will rise to 2.5 per cent by 2050 if left unchecked.
Its impact on climate change is said to be greater still as a result of the gases being released at high altitude.
Mr Brown is also conscious of Tory charges that green taxation has fallen in relative terms since he came to power.
The contribution made by green taxes, which include fuel duty and air passenger duty, to revenue fell from 9.3 per cent of total tax revenue in 2000 to 7.7 per cent in 2005.
Mr Brown has, however, ruled out implementing wide-ranging tax measures called for by Environment Secretary David Miliband in October.
He outlined a multibillion-pound package of levies that would substantially increase the cost of motoring, air travel, consumer goods and rubbish collection.
A spokesman for British Airways said: "We are opposed to further environmental taxes because we do not think they are a very effective way of addressing the issue of climate change.
"Taxation is a very blunt instrument."
A Ryanair spokesman said: "An increase in air passenger duty will do nothing to protect the environment and will only line Government coffers, while making travel more expensive for ordinary passengers."
But Peter Lockley, of the Aviation Environment Federation, said: "Each time a motorist spends, say, £25 filling his tank with petrol, £20 goes in tax. An extra £5 on a flight to Europe seems small in comparison.
"Doubling air passenger duty would bring in useful revenue, would be administratively simple and would not conflict with any international treaty obligations.
"It is often said by the airlines that APD is a 'blunt instrument' in that it does not provide specific environmental incentives.
"In fact, however, an increase in APD would directly address the problem that aviation is the industry with the fastest growing contribution to climate change - largely due to its rapid rate of expansion based on exemption from fuel tax and VAT.
"Doubling APD would increase the average cost of a return fate by roughly five per cent.
"In recent years APD has not kept pace with inflation, and the revenue from the tax has actually fallen."
Reader views (2)
I am astonished that yet again this tax is to be increased.Where will it end?
The problem is that once this tax is collected there in no transparency of its useage.It becomes a very lucrative pot of money.
The government should be accountable for the use of these funds and transparency should be made available to the public.
- Andrew Gregory,London,Uk, London,England
£20 a flight isn't going to stop anyone travelling. £100 a flight would make people think twice. Is this government going to get serious about the massive damage being done to the environment, or not?
The hypocrisy of a government that with one hand increases taxes on flights, and on the other hand still promotes building further runways at Stansted and Heathrow is mind-boggling!
- Phil Jones, London U.K.
