Gordon Brown will use tomorrow's pre-Budget report to double air-passenger tax in a move that will raise £1bn a year and show off the Chancellor's green credentials.
Although the package of measures is being finalised, Mr Brown is expected to end the freeze on petrol duty and unveil increases in road tax for the most polluting vehicles. Rumours of a doubling in Air Passenger Duty (APD), which has been frozen for five years, came as aviation industry leaders warned the Chancellor yesterday that he risked "weakening the very heart of the economy" if he increased taxes on flying or abandoned government plans for the expansion of airports.
Willie Walsh, the chief executive of British Airways, said there was "no evidence" additional taxation would make any contribution towards reducing carbon emissions. Speaking at the launch of a report, "The Economic Contribution of the Aviation Industry in the UK", he said the "best way forward" was for aviation to be included in the European Union emissions trading system.
Doubling APD would take the tax on a business-class ticket for a long-haul flight - outside the EU - to £80. The tax on an economy seat for New York-bound festive shoppers looking to take advantage of a cheap dollar would rise to £40. For short-haul flights, the tax would climb to £10 and £20 respectively for economy and business class.
The Chancellor is likely to raise road-fuel duty, which has been frozen at 47.1p since 2003, in line with inflation, raising about £275m. It is understood a decision on whether to raise the cost of Vehicle Excise Duty - the disc on the windscreen - for the most polluting vehicles would go down to the wire.
Although the Treasury does not consider APD or motoring taxes as green levies, the moves will be seen as a response to official figures showing the share of revenue contributed by green taxes fell to a record low last year.
The environmental accounts for 2005 published by the Office for National Statistics showed green taxes made up 7.7 per cent of government receipts, the lowest since 1987 when modern records began. They took just 2.9 per cent out of the economy, another 18-year low.Reuse content