Air Passenger Duty

Treasury written question – answered on 13th December 2011.

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Photo of Brian H Donohoe Brian H Donohoe Labour, Central Ayrshire 13th December 2011

To ask the Chancellor of the Exchequer

(1) how many of the 140 responders to the Government's consultation on the reform of air passenger duty who commented on the banding structure supported (a) the retention of a four-band structure, (b) a three-band structure and (c) a two band structure;

(2) how many of the 70 responders to the Government's consultation on the reform of air passenger duty who commented on class of travel supported (a) premium economy passengers to be liable for reduced rate and (b) premium economy passengers to remain liable for standard rate;

(3) how many of the 70 responders to the Government's consultation on the reform of air passenger duty who commented on class of travel supported seats with 40-inch seat pitch and less being liable for the reduced rate.

Photo of Henry Smith Henry Smith Member, European Scrutiny Committee 13th December 2011

To ask the Chancellor of the Exchequer

(1) how many of the 140 responders to the Government's consultation on the reform of air passenger duty who commented on the banding structure supported (a) the retention of a four-band structure, (b) a three-band structure and (c) a two- band structure;

(2) how many of the 70 responders to the Government's consultation on the reform of air passenger duty who commented on class of travel called for seats with 40 inch seat pitch and less to be liable for the reduced rate.

Photo of Paul Maynard Paul Maynard Member, Transport Committee 13th December 2011

To ask the Chancellor of the Exchequer how many of the 140 responders to the Government's consultation on the reform of air passenger duty who commented on the banding structure called for (a) the retention of a four-band structure, (b) a three-band structure and (c) a two- band structure.

Photo of Chloe Smith Chloe Smith The Economic Secretary to the Treasury, Member, Public Accounts Committee 13th December 2011

The Government decided not to change the air passenger duty (APD) bands as doing so would lead to an increase in APD for 91% of passengers. The APD consultation received 136 responses to the question on banding structure. Of this total, 77 supported a move to two distance bands, eight supported retaining the existing four-band structure and a further eight advocated moving to a three-band structure. A further 43 discussed the question and suggested other alternatives. Supporters of the two-band option argued that it would generate fewer anomalies and be simpler for passengers to understand and airlines to administer. Those in favour of the current four-bands or a system based on more distance bands argued that it would be fairer. However, there was no agreement on the composition of these bands.

The APD consultation received 70 responses to the question on class of travel. Of this total, 54 supported a reclassification of premium economy while 11 favoured retaining the existing rules. A further five respondents discussed the issue but offered no clear preference. Most of those who wanted premium economy to be taxed at the reduced rate advocated the use of a 40-inch seat pitch definition.

The Government considered this evidence carefully. A revenue neutral change to the current banding structure would have required those flying to band A and band B destinations (91% of passengers) to pay more. The Government therefore decided to retain the existing four APD distance bands.

It was clear from consultation responses on class of travel that premium economy products vary significantly between airlines. Any attempt to define premium economy for taxation purposes would increase the complexity of the tax, increasing the burdens for both industry and HMRC. A definition based on seat pitch would inevitably discriminate between similar products offered by different airlines.

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