Budget failure to tackle APD disappoints industry

Budget failure to tackle APD disappoints industry

Travel industry bodies expressed disappointment at the Chancellor’s failure to review or make fresh cuts in Air Passenger Duty in the Budget.

But Abta joined business leaders in welcoming the positive economic indicators outlined by Chancellor George Osborne and a series of business-friendly measures.

Abta chief executive Mark Tanzer said: “The Government’s review of business rates will provide a welcome opportunity to overhaul the outdated and expensive business rates regime.

“Other measures such as investment in transport infrastructure and tax changes will be welcomed by travel businesses and employees.”

Tanzer noted: “On APD, it is disappointing that Band B APD will rise by inflation from April 2016.”

However, he added: “The Government’s commitment to looking at the negative impact of devolved APD on England is an opportunity to highlight the damaging impact of this tax overall.”

Darren Caplan, chief executive of the Airport Operators Association (AOA), said: “UK levels of APD are the highest in the world and continue to act as a barrier to tourism, trade and investment.

“UK airports welcome the Treasury’s reduction of the longest-haul APD bands and abolishing the tax on children.

“However, we cannot ignore the fact that the overall rate of APD keeps increasing and is expected to net the Government a staggering £3.7 billion by the end of the decade.”

Caplan said: “The AOA has called for the Government to set out how and when it will respond to the devolution of APD to Scotland, and potentially Wales, so the industry can start planning.

“We urge Ministers to ensure this process is concluded as swiftly as possible.”

He added: “The Scottish Government could not have been clearer that it intends to reduce APD by 50% as soon as the power to do so has been devolved. The Treasury cannot wait until this happens to respond.”

British Air Transport Association chief executive Nathan Stower agreed, saying: “The Government has missed an opportunity to go further in setting a new course on APD.

“With the Scottish Government committed to halving APD rates when powers over the tax are devolved, the next Government should avoid unnecessary complication and boost the UK economy as a whole by simply abolishing APD in the new Parliament.”

Tax specialist Kal Siddique, partner at accountancy and consultancy firm EY – formerly Ernst and Young – said: “It’s disappointing the Government has already committed to post-election APD increases from 2016.

“The Treasury appears addicted to the £3 billion in annual APD receipts and is finding it difficult to let go.”

But Siddique pointed out: “APD is a hugely efficient revenue raiser for the Treasury – that £3 billion is administered by less than eight people in HM Revenue and Customs, with the bulk of the work done by the airlines as unpaid tax collectors.”

However, the UK’s leading business federation the CBI welcomed the Budget and made no mention of APD.

CBI director-general John Cridland said: “Stability and consistency are what businesses need to grow and prosper. This Budget sets the tone, providing a clear plan for fiscal health and growth.”

He added: “The Budget has some encouraging measures to help businesses create jobs.”

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