Rise in duty to hit the North where it hurts

Sep 21 2009 by Adam Jupp, The Journal

THE Journal today calls on the Government to scrap plans to hike aviation taxes, which business leaders say will have a devastating impact on the regional economy.

Air Passenger Duty (APD) is set to rise in November – and again in 2010 – meaning it will be four times as high as it was just three years ago.

The soaring rates, which are passed on to passengers, will mean some individual air tickets go up in price by more than £40, while family holidays could be up to £300 more expensive than they currently are.

It is predicted this could lead to airlines being forced to abandon key routes out of the North East’s two airports, while our chances of securing new services to destinations like New York could be scuppered.

And if flights to locations like London and other European hubs are lost, businesses may be forced to leave the region, delivering a crushing blow to employment levels and the wider economy.

APD, which generates around £2bn for the Treasury every year, is touted as a green tax designed to mitigate the impact of aviation on the environment.

But critics dismiss that claim, saying the money it creates is not spent on environmentally-friendly initiatives, while the EU’s Emissions Trading Scheme (ETS), which will come in in 2012, will exist to regulate pollution caused by the industry.

That is why we say the proposed increase to APD is a tax too far and urge Downing Street to immediately re-think the policy before it is too late for the North East and other regions.

Our call was last night backed by business organisations. James Ramsbotham, chief executive at the North East Chamber of Commerce, said: “I think APD is an extremely damaging tax.

“We rely so heavily on exports here in the region and that means we rely hugely on our links with other parts of the world and getting people from those parts of the world to come here. Being able to use our airports matters a lot and what we are saying is that this is a tax that is effectively discouraging people from flying.

“That means existing successful services like the Emirates flights to Dubai, along with our ability to attract new services to other long haul destinations, could be impacted.

“Here in the North East, we want really, really successful airports and we want flights to key locations both to the east and to the west, which is something we have been campaigning for, but APD is actually hindering that sort of activity.

“As a region, we have to work that much harder to secure routes and passengers and this kind of tax hits regions like ours a lot harder than it does major regional hubs like Heathrow Airport.”