Aviation Duty

Part of the debate – in Westminster Hall at 3:48 pm on 8th October 2008.

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee 3:48 pm, 8th October 2008

I can assure my hon. Friend that there is constant dialogue between the Treasury and the Department about a range of issues. Officials from the two Departments have been in touch with one another to see how best we can model and design this tax: that is what the consultation has been about, in some detail.

I accept that there are arguments for saying that introducing a new tax with a different basis changes behaviour. It is question of how we can best anticipate and model that so that we can achieve our environmental and revenue-raising objectives without causing damage. Hon. Members have talked about the aviation industry and the positive effect it has, both technologically and economically, in our society. I am still trying to get out of my head thoughts of Mr. Howarth in his aeroplane, hopefully ahead of the major bomber that will be taking part in the flypast. The hon. Gentleman captures the enthusiasm of a lot of people who are interested in industries that were created a century ago and upon which the prosperity of our country has been based for many years. The Government have no wish to do anything but continue to encourage them to prosper and grow.

My hon. Friends the Members for Eccles (Ian Stewart), for South Derbyshire (Mr. Todd), for Derby, North (Mr. Laxton), for North-West Leicestershire (David Taylor), and for Aberdeen, South (Miss Begg) made important and pertinent points. I can assure all of them that each detail is being kept in view in the work that is going on to design the tax. We are aware of all the issues to do with chasing freight offshore, the issues affecting particular regional airports and, obviously, of the economic benefits that come with having an expanding regional airport doing business. Clearly, Aberdeen has its own international context, which my hon. Friend the Member for Aberdeen, South talked about a great deal. Taking all these things into account is an important part of our design for the tax.

Opposition Members and hon. Friends talked about the way in which the tax was being modelled, particularly about whether using the maximum take-off weight was the right basis for the tax. This is probably the best proxy that we can get, in the current circumstances, upon which to base the tax, because we are trying to find an objective, uniform measure or combination of measures that will define an aircraft's flight, and maximum take-off weight is a reasonable one. Many hon. Members have said, understandably, that emissions would be a better basis on which to levy the tax, but the difficulty is the Chicago convention. Charging for emissions on routes has already been deemed illegal in the European courts, so it is dubious in the extreme whether we could charge a tax purely on emissions for those purposes, given our international agreements. We therefore have to find a proxy. We consulted on maximum take-off weight, and heard about some of the problems that have been raised in today's debate. We are happy to listen to other observations about whether we could use nitrate emissions and various other things, but the key to levying a tax is that it has to be simple enough for people to understand in advance what their liability is likely to be, robust enough not to vary between different flights by the same aircraft, and stable enough. Again, if hon. Members in the Chamber have other views, or have been in touch with stakeholders who have other views, I should be happy to hear them. However, we are still of the opinion that maximum take-off weight is probably about the best proxy for emissions that we have at the moment.

Annotations

John Byng
Posted on 9 Oct 2008 1:27 pm (Report this annotation)

The Government is right to seek to tax aviation thoroughly (so that the polluter pays) but in ways that do not drive business overseas. But if they get it right, the beneficiaries will not be foreign airlines and airports; they will be domestic surface transport providers, the domestic leisure industry and the environment (both locally and worldwide). It is regrettable that so many MPs think only of the damage to aviation dependent industries without recognising the benefits to other industries and the environment.

Unfortunately the Government recognises the need for climate change targets but at the same time still supports growth in air transport. They need to appreciate that controlling climate change is going to be painful and expensive and that any growth in air transport will add to the cost and pain. We will only be able to cope with the challenges of climate change and dwindling oil supplies if we discourage growth in aviation and encourage more sustainable economic activities.