Bertram Leon
A motion tabled by the Backbench Business Committee on the APD was debated on 1st November in the chambers of the House of Commons. Priti Patel MP and Henry Smith MP (both Conservative party members) were the main instigators behind the motion.
A number of MPs had special interest in the debate, as their respective constituency ward covered several businesses and airports affected by the APD.
Air passenger duty is levied on passengers travelling from UK airports on chargeable aircraft. The UK currently has the highest rate of APD in the world. There are also different levels of duty depending on the passenger’s final destination.
The motion called for the government to review the impact of the Air Passenger Duty (APD) on the economy, families, business and the tourism industry. The motion also argues that the duty “acts as a barrier to economic growth and deters both inward investment and inbound tourism” and makes the UK less competitive than countries with lower aviation taxes.
Sajid Javid. Photo courtesy en.wikipedia.org
It also called on the Treasury to study the impact of air passenger duty before the 2013 Budget and to freeze the duty while the study is carried out. The motion was backed by a cross-party group of MPs, including members of the All-Party Aviation Group. Some MPs went further and asked for the current levy to be reduced and any proposed future levy to be shelved.
Over 200,000 petitions were received according to MPs for this debate, one of the largest ever recorded. The number of petitions required to secure a debate in parliament is 100,000.
The government receives nearly £3 Billion in tax revenues from APD in 2011/12 according to the Treasury figures. The current austerity measures mean that this revenue stream is regarded as vital for the economy, and also, it is very easy to collect and administer.
MPs have urged the Treasury to carry out a “comprehensive” study of the “full economic impact” of air passenger duty in the UK, arguing that it is acting as a barrier to growth.
In April this year, APD rose by 8%, as announced by the government in the autumn statement. Priti Patel MP said the tax was having a “negative impact on families, deterring investment, holding back business and making the country less competitive”, as she opened the backbench debate on the subject.
“Research already conducted has shown that the cost to the wider economy is far greater than the tax receipts coming into the Treasury,” she claimed. “When taxes are causing more harm than good, they need to be reformed,” she added. These sentiments were also shared and supported by several other MPs, whose constituencies consist of large numbers of black and other minorities including families who originated from the Caribbean.
They also highlighted the impact the tax was having on families and tourists travelling to that region and equally important the economies of these small states.
The motion attracted cross-party support, including members of the all-party parliamentary aviation group. Labour MP Paul Goggins said APD was a “tax on holidays” and the aviation industry. Labour MP Brian Donohoe said “the tax was discriminatory on the Caribbean” who depends heavily on tourism.
He said “it was bad for the UK and disastrous for the many islands whose economy relies heavily on the tourism sector”. DUP MP Nigel Dodds said the UK had the highest APD in the world, which was twice the level of the next most expensive country, Germany. He said it puts the UK at a “severe disadvantage”.
Cathy Jamieson. Photo courtesy en.wikipedia.org
Cathy Jamieson MP acknowledged the “strength of feeling” on the subject. The shadow Treasury minister said that the UK Labour Party would support a review so the matter could be looked at in more detail, not just for the UK economy but also for the wider international tourism sector. It was noticeable that no MP spoke against the motion.
The Economic Secretary to the UK Treasury Sajid Javid (the minister with responsibility for implementing the ADP) stressed the importance of the aviation industry to the UK economy. But he said the government had “no plans for further reform” of APD “at this point”, adding that the tax made an important contribution to the nation’s finances and previous consultation on the matter “had taken place with a wide range of interest groups in 2011”.
The motion was however agreed unanimously without the need for a vote. No date was agreed on when the review will take place.
What does this mean for the Caribbean and our families in the UK? Well it means that the current unfair tax is still in place and will continue to be implemented. Because of the unanimous approval for a review, does not mean that we are victorious. On the contrary, we are at the starting block to a very long campaign.
The motion agreed was not to reduce or abolish the APD, but merely to conduct a comprehensive assessment of its impact on the economy. Increases earmarked for 2013, may still go ahead while everyone waits for this review. The ADP campaign groups will continue to apply pressure for the government to change course, but this will be an uphill battle and struggle.
The Caribbean is and will remain at a disadvantage as has already been identified. It was remarkable that a number of MPs commented that they found it “bizarre that the tax on an air ticket is higher than the actual ticket price itself”. “Economic sense“said one “must be brought back into this arena”.
For more discussions about the APD click here
Bertram O. Leon, SLPM
President of Union of St Lucian Overseas Associations (USLOA)
& St Lucia Diaspora Representative – APD National Committee, UK
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