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Axing APD 'may boost travel options'

15 June 2015 09:26

The duty raised over £3 billion last year

The duty raised over £3 billion last year

Abolishing the airport departure tax would enable carriers to open up more destinations to UK travellers, a new report claims.

The report, commissioned by airlines, also indicates that getting rid of Air Passenger Duty (APD) would boost the UK economy by creating thousands of new jobs over the next few years and bringing more tourists into the country.

The report by professional services firm PwC says scrapping the tax could result in airlines being able to invest in more routes - something which could heighten the need for people to get a decent worldwide travel insurance policy.

The highest APD rates and the tax on children under 12 have been scrapped but a couple making a long-haul flight are still being asked to pay £142.

The new report updates the findings of a previous one compiled by PwC for British Airways, Virgin Atlantic, Ryanair and easyJet two years ago.

It predicts Britain's gross domestic product (GDP) could be boosted by about 0.5% during the first 12 months without the tax on air travel, eventually resulting in 1.7% worth of economic growth by 2020.

And that, the report claims, would help create up to 61,000 new jobs by the end of the decade.

The last financial year saw APD generate more than £3 billion for the Government.

But the report says although the Government would no longer get that money, its loss would be more than outweighed by the revenue raised from other taxes.

It estimates that abolishing the levy would actually result in the generation of £570 million worth of extra tax revenue during the first year, and up to £2 billion worth by 2020.

The report also predicts that axing the tax would boost international trade and increase the number of foreign tourists visiting the UK by 7%.

Nathan Stower, the chief executive at the British Air Transport Association - the trade organisation for Britain's airlines - says it is essential that the next Budget is used to scrap APD.

He says despite being an island - something entailing a reliance on air travel - the UK taxes it more heavily than any other country in the world.