The UK’s air transport tax system calls for pressing modernisation. Present tax charges are misaligned with authorities coverage and, at a difficult time for presidency funds, luxurious air journey will not be contributing its justifiable share to the general public purse. The present system incorporates perverse incentives that encourage environmentally damaging behaviour whereas failing to use the ‘polluter pays’ precept to which the federal government has subscribed. Forecasts of future demand progress, at the moment getting used to tell choices comparable to airport enlargement, are predicated on the idea that the business won’t pay its justifiable share.
Governments throughout Europe, comparable to France, Germany, and the Netherlands, have begun recognising that aviation taxes should rise. A key concern, nonetheless, is the equity of any will increase. The UK authorities is correct to recognise the social and financial significance of the UK’s air connectivity. For communities, together with latest migrants, college students, humanitarian staff, and others, air journey gives an important and unquantifiable social profit that might be harmed by a poorly thought-through aviation tax coverage. This complexity, nonetheless, will not be an excuse for inaction. The present system is poorly designed and is inserting an unfair burden on wider society.
As this report evidences, latest progress in air journey demand has skewed closely in the direction of journeys taken by travellers who already journey very continuously, ie sector progress doesn’t originate from the annual household vacation. Progress derives from extra frequent flyers, flying extra continuously. We doc the emergence of the ‘ultra-frequent flyer’. This group of people who fly six or extra instances per 12 months (at the least as soon as each two months) make up just below 3% of the UK inhabitants however take just below 30% of the entire journeys within the UK’s air community. Opposite to standard perception, nearly all of the flights taken by this group are taken for leisure, not enterprise. The group are extra seemingly than common to take shorter-haul flights replaceable by practice journeys and more likely to journey in enterprise or firstclass.
The problem for the federal government is to develop a tax system which balances competing targets and ranging ranges of precedence want for air journey. Whereas it’s inevitable (and accepted by the federal government) that expenses for the carbon emitted by air journey, significantly the long-haul section, should rise, these will increase must be managed in a method that’s delicate to each the realities and optics of equity. The UK public understands the local weather crucial and is open to the worth of flying rising, however they present a powerful want for rare journey, or the household vacation, to be protected against blunt tax measures, and for the business itself, and its heaviest customers, to shoulder the lion’s share of the transition price.
This report explores how a bundle of policy-aligned tax reforms might higher be sure that social (and enterprise) air journey wants are pretty met whereas supporting the broader economic system and respecting ecological limits. These insurance policies purpose to make the equity of the inexperienced transition specific. Key components embrace:
- Rising emissions expenses on EU routes such that they align with the federal government’s Jet Zero technique.
- Levying a carbon tax on non-EU routes to implement the polluter pays precept and remove the imbalance between EU and non-EU journey incentives.
- Considerably growing expenses on luxurious journey to right the extremely low proportionate ticket taxes utilized on probably the most damaging types of journey.
- Providing a ‘first-flight’ low cost to all UK residents to guard the household vacation.
- Implementing a brand new cost on the tax return of ultra-frequent flyers taking 6 or extra flights per 12 months to encourage sustainable selections from excessive emitters.
The bundle proposed delivers a extremely progressive distributional affect with options just like the frequent flyer levy (FFL) argued for by NEF beforehand. That is secured in a fashion that’s simpler for presidency to manage, and extra visibly targets probably the most extreme types of luxurious air journey. The bundle of coverage measures introduced might elevate as much as £6bn per 12 months in tax revenues and ship as much as a 28% discount in aviation CO2 emissions by 2030 (Determine 1). These advantages are secured with none web change to the worth of a UK resident’s first short-haul flight of the 12 months.