‘World’s highest air passenger taxes’ are damaging tourism, business and labour mobility, says Campbell Dallas

A study by Campbell Dallas’ membership network showed that the UK imposes Air Passenger Duty (APD) of £13 on short haul flights, and £71 on long haul flights leaving from airports in England and Wales (long haul flights from Northern Ireland are exempt).

The Scottish Government has committed to cutting APD by 50 per cent when powers are devolved under the Scotland Act and a recent report, commissioned by Edinburgh Airport, showed that Holyrood’s planned 50 per cent reduction in Air Passenger Duty could add £1 billion to Scotland’s economy and add 3,800 jobs by 2020.

The Campbell Dallas analysis showed UK charges are currently the highest within the EU and well above the average for G7 countries, which currently sits at £10 (US$15) on short haul flights and £23 ($34) on long haul flights.

The accountant said that the global average, based on countries where aviation taxes are imposed, is currently £15 ($23) on short haul flights and £35 ($53) on long haul flights.

Many countries, however, do not currently impose any taxes on individual air passengers.

The report comes as further analysis from global accountancy firm PwC revealed that scrapping the APD could create up to 61,000 UK jobs by 2020.

According to PwC’s airlines-commissioned report, more tax revenue would be raised from other taxes than is lost from scrapping APD and the UK economy could be 1.7 per cent bigger by 2020 than would be the case if APD were to remain unchanged.

Meanwhile, Campbell Dallas stressed that APD could also be affecting airlines’ abilities to offer less profitable routes, which can reduce regional cities’ attractiveness as a business location.

A recent House of Commons Transport Committee report indicated that APD directly affects the growth and viability of smaller airports.

Aileen Gates, tax partner at Campbell Dallas said: “Airlines provide a crucial piece of infrastructure. They facilitate a great deal of economic activity that is essential for countries that want to benefit from globalisation. The higher taxes on flying in the UK hurt airlines, business users and consumers.”

“Countries and cities that are expensive to fly to lose out on tourism. High air taxes can also be harmful to businesses, as in many commercial relationships there is simply no substitute for face to face contact.”

She added: “For smaller businesses, the cost of flying to see customers may be a serious consideration in deciding whether not to expand into new markets, especially overseas – it can lock them out of globalisation. Air Passenger Duty can add another 10 per cent to the cost of flying, so it can pose a meaningful additional burden on budgets.”

Campbell Dallas said that the most expensive taxes are for long haul flights departing from a Russian airport, where unlike many other countries, airline tickets are subject to sales taxes. The highest taxes of any G8 economy are in the USA, which imposes £15 ($23) worth of taxes on a short haul ticket.