Saturday, October 30, 2010

Aviation Crying over "APD" (Air Passenger Duty) without telling the whole story

Quote from Fight The Flights

"The reality is that aviation simply don't want to pay their way. They are happy to defend their corner consistently to reject paying the full cost of their activities and pass those costs onto those that fly, and those that don't fly. Those that fly pay APD, and in addition everyone else including the flyers ends up contributing around £400 a year in tax to the aviation industry benefit system in terms of government subsidies and tax breaks. Correct us if we're wrong! If passengers want to point the finger at anyone for their APD costs they should perhaps consider looking to the aviation industry itself!"

Quotes from John Stewart Chair of HACAN

"A lot of complaining from the aviation industry about the rise in Air Passenger Duty. They are misleading people. The aviation industry is not over-taxed. Even with the rise in APD it is still undertaxed. The Exchequer is losing around £10 billion because aviation fuel is tax-free and the industry pays no VAT. The income from APD is still well below half that figure."

"More on APD: Aviation says it pays for its emissions through the European Emissions Trading System. That is beginning to happen but that doesn't cover noise or community destruction. And it misses the point: APD is not an environmental tax. It was introduced by Kenneth Clarke in the early 1990s to help make up the shortfall in aviation's contribution to general taxation. That is still its purpose."

Quote from Plane Stupid

"Has any industry claimed to care more for their customers than the airlines? The past few weeks have seen pundits from any company with the slightest interest in aviation fronting up at the BBC's studios to defend hard working families from proposed rises in air passenger duty. Those rises are: a staggering £1 extra for short haul, £5 extra to fly a little further, £10 extra on a flight to Thailand or Brazil and a whopping... £15 on a flight to Singapore.

Now far be it from me to say that those rises hardly break the bank, or to accuse the airlines from being self-interested: I'm sure that their efforts to pay even less tax than they already do are motivated purely by altruism. After all, it's not like this is an industry which invented charges for bringing bags with you on holiday, or for paying with a credit card, or for not paying with a credit card, or for the fuel used in the plane, or to sit by the window... I could go on, but I'm sure you get my point.

The industry claims it already covers the cost of its environmental impact, so the 'hard working family holiday tax' doesn't need to go up anymore. This is one of the problems with monetising things like climate change: while you can work out the cost of a something tangible, assigning a figure to the range of outcomes from a human-induced temperature rise (which may or may not happen, depending on whether we stop climate change) is almost impossible.

This is all a bit complex. Firstly the cost of climate change is directly related to whether we manage to keep our emissions in check. If we do, then the cost of a tonne of carbon is quite low; if we fail then the cost is exorbitant. That's the problem: if carbon is cheap we'll keep emitting it but if it's expensive then we'll cut down, so whatever outcome we think will happen prices carbon emissions so that we actually get the opposite effect. Instead of assuming we'll stop climate change we should assume that we won't and price emissions accordingly; this would make the cost of CO2 high enough that we'd have an incentive to change our behaviour and thus avert disaster.

It's not like air passenger duty is spent tackling the problem; like most taxes it disappears into the black morass of Government spending. No matter what it says, the industry is not paying for the damage it causes: it's not like Michael O'Leary will turn up in Gloucester to pay for the flood damage, or Willie Walsh will help Africa cope with drought caused by second home owners topping up their tans too frequently.

Luckily this whole economic credit crunch means that taxes on flights will keep rising so we can bail out more and more bankers, so the industry won't get its way no matter how many minor celebs it wheels out in support. On second thoughts, I'm not so sure that's a good thing. God, the intricacies of fiscal policy are more complicated than I first though..."