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The Airport Operators Association (AOA) has called on the government to provide clarity on the future of Air Passenger Duty (APD) in next month’s Budget.
AOA chief executive Darren Caplan urged the Chancellor “to take the opportunity to reduce APD by at least half, so the UK rate is no higher than that of our closest European competitors”.
Chancellor George Osborne is expected to confirm the devolution of APD in Scotland and Wales in his Budget on March 16.
The current Scottish government has pledged to cut APD by 50% and the Welsh government is expected to scrap APD all together.
Bristol Airport demanded the government halt devolution of APD last week, arguing it would distort the market and cost the economy of the southwest more than £840 million.
Caplan said: “Despite recent changes on longest-haul APD rates and the exemption for children, the UK still has the highest APD rates in the world.
“With the Budget due next month, we urge the government to take this opportunity to reduce APD by at least half.
“Doing so would result in more people travelling, more jobs, more business and higher tax revenues for the Treasury from the increased economic activity.”
He also urged the government to respond to a review of the impact of devolving APD, launched last July with a discussion paper outlining three options to support airports negatively affected.
The options – of devolving APD within England, allowing variable rates of APD in England or providing aid to regional airports in England – attracted almost universal criticism.
Caplan said: “It has been over six months since the government published its discussion paper and it’s time for ministers to set out how they intend to resolve this situation.
“The Scottish Government has been clear for some time that it plans to reduce APD by 50% from 2018, with a view to abolishing the tax altogether.
“The Treasury should be in no doubt that this reduction will take place and it needs to provide clarity to the industry as to how it intends to react to ensure airports in all parts of the country are not adversely impacted.”
He added: “The prime minister was quite clear during the 2015 General Election campaign that he would not allow unfair tax competition to damage UK airports.
“We need to see him honour this commitment. A reduction in APD in Scotland should be matched by the equivalent cut everywhere so no part of the country is disadvantaged.”
But Caplan added: “Whatever policy response the government settles on, it needs to publish this very soon so the industry can start planning. This cannot be allowed to drag on.”