Gordon Brown was urged yesterday to impose higher taxes on air travellers by a Labour-dominated committee of MPs who said an increase was urgently needed to help Britain meet its climate change targets.
The Commons Treasury Select Committee said that the Chancellor's justification for freezing air passenger duty (APD) in last month's Budget for the fifth year running was "incoherent and unconvincing", and called on him to make "the fullest possible use of taxation measures" to achieve the Government's environmental targets.
Specifically, the committee said the Government should give "serious consideration" to increasing the rate of APD, noting that tax receipts from the levy had fallen 8 per cent between 2000 and 2004, even though passenger numbers had risen 35 per cent. The committee said that if this trend continued then the APD risked becoming "an ineffective policy instrument" which did nothing to address the problem of aviation's contribution to rising greenhouse gas emissions.
The reason for the decline in tax receipts was Mr Brown's decision in 2000 to introduce a new lower rate of APD for short-haul economy flights of just £5. "It is telling that the only aviation-specific taxation measure contained in the Budget is to widen the scope of the European APD to include Croatia - meaning that it is now £15 cheaper to fly economy class to Croatia," said the MPs.
Over the four-year period, the number of chargeable passengers had risen by more than a third to 25 million, and greenhouse gas emissions had risen by 10 per cent or 800,000 tonnes, but tax receipts from APD had fallen from £931m to £856m.
The Treasury told the committee that the plan was to tackle carbon emissions from passenger aircraft by bringing aviation within the EU emissions trading scheme, which currently applies only to heavy industry. But the MPs said that time was running out to bring aviation into the scheme before 2012, and anyway this was only part of the answer. More had to be done at a domestic level.
John McFall, Labour chairman of the committee, said: "The UK is lagging behind on its domestic CO2 targets, and greenhouse gas emissions in the EU from international aviation rose 73 per cent between 1990 and 2003. In this context, the explanations offered by the Treasury about the behavioural effects of its environmental tax policies, and APD in particular, were unconvincing." In addition to action within the EU, the Government must act at a domestic level to curb greenhouse gas emissions from aircraft, he added.
Vince Cable, the Liberal Democrats' Treasury spokesman, said the freeze on APD "demonstrates the shallowness of the Government's green rhetoric".Reuse content