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Rates of Air Passenger Duty

Part of Clause 9 – in the House of Commons at 7:45 pm on 11th March 1997.

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Photo of Jim Wallace Jim Wallace , Orkney and Shetland 7:45 pm, 11th March 1997

I agree about it being a tax on children and I was going to refer to that. As a generality, however, I find it one of the more difficult taxes to oppose—it is more a case of the details of its imposition. Among European Union countries, we probably have the lowest rate of air passenger duty, so I do not think that it produces a competitive disadvantage. I am concerned about its imposition on vulnerable communities and routes.

In October last year, British Airways withdrew its services on routes in the highlands and islands, claiming that it could no longer make a profit—indeed, it claimed that it had never made a profit—and that they were loss-making routes. The services are now being run by British Regional Airlines, which I am sure will try to make them profitable and successful.

In being asked to apply air passenger duty to routes serving the islands, we are being asked to tax a loss-making operation. Highlands and Islands Airports is subsidised by the Government. It reckons that, as a direct result of the duty that came into effect in November 1994, it has identified a less than projected increase in air travel in the region.

On the one hand, we are taxing loss-making routes—that could lead to greater subsidies being required for Highlands and Islands Airports—and on the other, we are paying a subsidy. The hon. Member for Upper Bann referred to the cost of about £247 for a return fare from Belfast to London. I do not have a ticket on me, but it costs approximately £480 or £490 for a return fare from my constituency to London. That is a phenomenal cost, and the Government now want to place an additional tax on top of that.

Businesses in the islands operate on pretty slim profit margins because of where they are. One cannot alter facts of geography, but one can try to minimise the disadvantages. One way to do so is to ensure that no additional burden—