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The existing basis of Air Passenger Duty will be changed from 1 November
2009. Instead of a rate per passenger, the duty will be levied on a “per
flight” basis. It will be interesting to see the details of the proposal,
which is expected to generate an additional £520 million of tax. In the
meantime, a change is to be made to the current rules on APD, from 1
November 2008, so that the standard rate of tax will apply to “business
class only” flights.
Our view
In its current form, the relatively low rate of APD is unlikely to lead
to wholesale behavioural change amongst passengers and simply raises
additional tax. It is likely to be hard to set the tax at a level that
would have a genuine impact without making flying prohibitively
expensive for the less well off. The weakness with the proposal is that
with the tax levied on the airline and not the individual, it is less
transparent and even less likely to affect behaviour patterns. |
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