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Yeadon airport chief: ‘Scrapping flight tax would boost business in region’
Scrapping the so-called ‘flight tax’ would boost Yorkshire’s economy and the region’s international links by levelling the playing field with European aviation competitors, according to Leeds Bradford Airport’s marketing chief.
Tony Hallwood, LBA commercial director, has backed calls for the Government to abolish Air Passenger Duty in the light of a new report which claims the move would generate a net tax gain for the Treasury and create nearly 60,000 new jobs.
Duty of between £26 and £184 is levied on each passenger on every flight, depending on the distance travelled.
Since January 2007, APD has increased by up to 260 per cent for short-haul flights and up to 360 per cent for long-haul.
Mr Hallwood said: “Leeds Bradford Airport welcomes this report as we have long been calling for APD to either be abolished and significantly reduced in order to make us more competitive with other European countries and to boost Yorkshire’s economy and connectivity with international markets.
“Removing this tax would enable us to fly to more places and generate economic activity, which would generate income for the Treasury through other taxes. It would be a virtuous circle.”
The study by business advisers PwC was commissioned by four major UK airlines into the economic impact of APD. It used a model favoured by Chancellor George Osborne and used by the International Monetary Fund, World Bank and some governments.
It found that abolishing APD would boost UK GDP by 0.46 per cent in the first year, with continuing benefits up to 2020. The boost to the UK economy would amount to at least £16 billion in the first three years and result in almost 60,000 extra jobs over the longer term.
PwC said abolishing APD would pay for itself by increasing revenues from other sources such as income tax and VAT. This net benefit, even after allowing for the loss of APD revenue, would be almost £500 million in the first year.
It suggests that the economic boost would come from extra investment by airlines to expand their networks, and investment by other aviation businesses to support this growth. Scrapping APD would also bring a net increase in inbound tourism, which counts as an export for the UK economy.
Increased business travel through better connections would also improve productivity and create employment.
The report states: “Abolishing APD has the potential to reduce the cost of flying, making it cheaper for businesses to maintain relationships with overseas customers. In this sense, APD could be regarded as a tax on exports.”