UK budget avoids decision on new aviation tax

| 22nd June 2010
An airplane
London mayor Boris Johnson has backed plans to double the number of flights from London City Airport

A per plane tax duty would incentivise airlines to increase plane occupancy and reduce the overall number of flights, say campaigners

Chancellor George Osborne promises only to 'explore' proposals for bringing in a per-plane tax on the aviation industry

Green groups have expressed disappointment at the UK government's refusal to introduce a per plane duty instead of the current per passenger tax.

The Liberal Democrat's committed in their manifesto to replacing the Air Passenger Duty (APD) with a Per Plane Duty (PPD), in a bid to encourage airlines against flying half-empty planes. The Conservatives had also indicated they were in favour of a PDD.

However, in his budget speech today, chancellor George Osborne said the government would only 'explore changes to the aviation tax system, including switching from a per-passenger to a per-plane duty, and consult on major changes'.

Aviation tax breaks

The thinktank Green Alliance published research last week highlighting how the UK aviation sector was enjoying tax exemptions worth £10 billion a year because of not paying any fuel tax or VAT on airline tickets. It said travellers were paying more to drive than to fly, despite its greater carbon emissions.

It said scrapping the APD and replacing it with a PPD would 'incentivise airlines to increase plane occupancy and reduce the overall number of flights'.

Green Alliance director Matthew Spencer said changes to how the aviation sector was taxed were a 'core commitment in the Coalition Programme'.

'There's never been a better time to make aviation taxation can contribute to the UK's recovery, as well as promoting greener alternatives such as train travel and video conferencing.'

Aside from the announcement on aviation taxation, the budget made few specific environmental announcements other than promising to establish a Green Investment Bank 'bringing forward private investment in clean energy and green technologies'.

Proposals for the new bank will not be published until the Autumn.

Useful links
Full Budget details
Green Alliance report

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