Comment: No surprise in the Budget, but what now on APD?

Comment: No surprise in the Budget, but what now on APD?

Yesterday’s Budget contained no real surprises, least of all on Air Passenger Duty. The industry reaction offered few surprises either.

There were ritual expressions of disappointment - a result of palpable frustration and perfectly understandable.

But there is only so many times you can sing the same song.

George Osborne did cut one duty - on beer. Indeed, he announced the removal of the beer duty escalator - the inflation-plus formula that has hiked beer tax up to now.

He maintained the duty rises on wine and whiskey. Was this because the Campaign for Real Ale, Camra, has run a so much more compelling campaign for a reduction in duty than the travel industry’s Fair Tax on Flying coalition?

No, the Camra campaign petition gathered half as many signatures as A Fair Tax on Flying garnered emails to MPs last summer.

The cut in beer duty was a relatively cheap and populist measure. The duty on a pint will remain above 54p from Sunday, on top of VAT of 58p in a pub - when a pint might cost £3.00.

Osborne also froze petrol duty - a tax that hits vast numbers of people daily in a way that APD does not. The reality is most people fly once or twice in one or two years and mostly short haul.

Those eye-watering long-haul APD rates affect a minority. The degree to which they impact on potential GDP growth is open to debate. But it is politics we are dealing with here, not economics.

The industry has a case. It is right to fight its corner. It will no doubt feel it has changed the ‘narrative’ in relation to APD, given the support of so many MPs.

But would Ed Balls as Chancellor act so differently to Osborne?

At the same time, the sector’s incessant drum-banging and repetition of the same phrases is at risk of appearing parochial and/or obsessive.

The eurozone crisis has returned to centre stage and Cyprus risks a bank run which threatens consequences for the rest of Europe.

The UK government is committed to policies that mean the biggest squeeze on incomes in a century. APD constitutes barely a side show to this.

Indeed, there are forces at play that would render an abolition of APD irrelevant to the industry’s fortunes. It might be better to recognise that.


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