Doubts over government pledge on air travel tax

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Car Rental News - 14/03/2011


European law may force the government to go back on a key election promise

The government may be forced to go back on a key election promise to introduce a green tax on air travel. Questions are being raised about the pledge after it appeared that such a move would be in breach of European laws.

During campaigning in the run up to last year’s election, the coalition pledged to reform the air passenger duty (APD). The APD is a tax levied on all passengers on aircraft departing Britain, apart from people on transfers.

The environmental tax aims to reduce the production of greenhouse gases. Both the Conservatives and the Liberal Democrats said they wanted to replace the existing tax with a new, per-plane tax structure that would give airlines an incentive to reduce their carbon footprints.

Reports have now emerged that the coalition government has cancelled those plans as the proposed taxation would break European Union laws. Government sources would neither confirm nor deny reports that the planned reform was being abandoned. They did, however, admit that ‘question marks’ had appeared over the plan.

Airlines including Virgin Atlantic, British Airways joined airports like Heathrow and Gatwick, tour companies and travel firms to pressure the government not to implement the proposed per-plane tax. Just last week, George Osborne was warned not to increase air passenger taxation in the upcoming budget.

The airlines opposing higher passenger taxes said Britain’s aviation industry is already taxed more heavily than any other in the world and increasing that burden would damage the UK’s economic recovery. Some low-cost airlines that operate fleets of more energy-efficient aircraft have been critical of the failure to address environmental issues, however

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