No joy in budget

29th March, 2006

There was no change in the level of Airport Passenger Duty (APD), the only tax on aviation.

Despite growing chorus of protest about the tax exemptions for aviation, Gordon Brown announced there would be no changes in the 2006 budget.Airport Passenger Duty (APD) is the only tax on air travel. It brings about £900 million pa, way short of the £9 billion tax that campaigners believe should be paid. (This is the amount that would be collected if there waa a tax on aircraft fuel equal to the tax on petrol.) APD will remain unchanged.

Furthermore, the Chancellor announced that he was seeking to raise from £145 to £1,000 the limit on which goods brought from outside the EU would be exempt from VAT. However, this requires EU agreement. If the limit were raised to £1,000, this would mean a tax exemption of up to £175 for every trip. This is in effect yet another subsidy for aviation. If the fare was under £175, it could make the effiective price negative!