§ Mr. ColvinI beg to move amendment No. 1, in page 2, line 31, at end insert—
`and at the end there shall be inserted "but there shall be no duty of excise on aviation gasoline fuel, as defined in section 11(2)(a) below",'.The amendment would wholly abolish the excise duty on aviation gasoline, or avgas.After all that has been said about hon. Members declaring their interests I must say that although on my curriculum vitae I am listed as a qualified pilot, as a Member of Parliament I have neither the time nor the money to maintain the validity of my licence; more's the pity. In reply to what the hon. Member for Newcastle upon Tyne, East (Mr. Brown) said about tax avoidance, the rate at which the Government are cutting rates of tax will soon mean that the tax avoidance business will be out of business. Perhaps next year his list will be a great deal shorter.
Avgas fuel is used in piston-engined aircraft and bears duty of 46.5p per gallon plus VAT, whereas aviation kerosene, which is used in the more expensive turbo-prop and jet engines and which is called avtur, carries no duty. The amendment would remove this gross injustice. We hoped that the Government would remove the injustice in 1982. On that occasion, having won the argument, we gained only a 50 per cent. reduction in the duty. This amendment gives the Government the opportunity to complete the welcome reform which they began then.
I have heard it said within the Treasury that avgas is mostly used for private and pleasure flying and avtur for business and commercial flying, so the so-called wealthy private pilots who can afford to fly for pleasure may just as well pay duty on that fuel. That is based on a false premise. If the Treasury still uses that argument, one must question the validity of any other reasons that it puts forward for resisting the amendment.
Any analysis will show that the vast majority of passengers flying commercial airlines do so for recreation and pleasure, not business, while most of the fuel used by general aviation, that is the smaller aircraft, is for business purposes. The breakdown of general aviation and flying shows that 63 per cent. is air taxi operators, corporate and third-level passenger operations, 25 per cent. is flying training for professional and private ratings, 10 per cent. is agricultural flying and aerial work, and just over 2 per cent. is pure sport and recreation.
The general aviation training role is particularly important. Between 1975 and 1986, little sponsored training for civil aviation took place in the United Kingdom because the airlines did not need the additional pilots. Now, with civil aviation booming, the airline industry is grabbing every available pilot and there is a serious shortage of air taxi pilots and flying instructors, which must be made up. Without the pool of private pilots to draw upon, I reckon that commercial civil aviation would probably collapse.
478 This demand is worldwide. Because of the extra burden of avgas duty and the resulting higher costs which our flying schools have to bear, the training of overseas pilots in Britain has almost stopped. That means a loss cif invisible earnings of about £25,000 per head, a total running into tens of millions of pounds of lost foreign revenue for Britain.
The Government suggested that if the duty on avgas was abolished the fuel would be used in motor cars. Not only would avgas with no duty still be up to 16p more expensive than ordinary motor fuel, but it would do the engines of motor cars no good. Because of its special chemical characteristics, it is not suitable for cars. In any case, the distribution of avgas is strictly controlled by a few organisations and it is delivered only to our 60 or so airfields. Also, because the amount of avgas used in proportion to motor fuel and avtur is tiny, its consumption can easily be monitored, it can be dyed like farm diesel and spot checks can be carried out on its use.
It is good that the Government are interested in saving administrative costs. The Customs and Excise are certainly no exception. A pilot flying an avgas-fuelled aircraft can claim back his duty paid before departing on an international flight. A lot of bureaucracy and red tape are involved in completing and verifying all the documents, counter-checking claims and issuing cheques for payments. Abolishing the duty will abolish all this cumbersome bureaucracy.
What would this cost? In a full tax year, the loss to the Revenue of completely abolishing avgas would amount to £2,500,000. To put that in perspective, it is the cost of half a mile of motorway.
To sum up, 95 per cent. of British general aviation aircraft are piston-engined and use avgas, which is heavily taxed. The other 5 per cent. are jet-engined or turbo-prop-powered and use avtur, which is tax-free. The jet and turbo-prop operators could be said to be the wealthier end of the general aviation market, yet their fuel is duty-free and their less wealthy competitors use fuel bearing 46p per gallon duty. That is illogical discrimination, and it is dotty. This highly entrepreneurial industry, mainly composed of small businesess and self-employed people—exactly the sort of people we are pledged to support—does not need the millstone of avgas duty around its neck.
I have a letter from Mr. Danny Forman who, as chief executive of the General Aviation Manufacturers and Traders Association, has done a great deal to help commercial and general aviation in the United Kingdom. He has placed an advertisement in the aviation trade publications. The heading says, "Spot the Difference". Beneath it are pictures of two aircraft that look identical. Both have a crew of two and carry eight passengers. Both are low-winged monoplanes. Both have twin engines, propellers and tricycle undercarriages. Both are used extensively for business transport to save the valuable time of executives working for the United Kingdom economy.
But the aircraft on the left has a propellor turbine engine using avtur fuel, thus paying no duty or VAT. The aircraft on the right, used for exactly the same purpose and looking identical, is a propellor piston-engined aircraft using avgas fuel and paying 46.5 per cent. per gallon duty —and probably 15 per cent. VAT on top of that. Most of 479 my hon. Friends feel that that is completely incomprehensible. My right hon. Friend the Chancellor has demonstrated that he can and does axe taxes—why not this one?
§ Mr. James Wallace (Orkney and Shetland)The hon. Member for Romsey and Waterside (Mr. Colvin) has advocated the case so well that little remains to be said. I rise only to lend support to his argument. I have received representations from the Orkney flying club, in my constituency, which made a compelling case for the abolition of this duty. It not only finds the difference between avgas and avtur anomalous, but it has pointed out that Loganair's islander planes which operate in my constituency are all piston-engined aircraft and the duty paid on the fuel will undoubtedly lead to increased transport costs for those who fly back and forth from the main island to the north isles of Orkney and Shetland. That constituency interest is important, because of the increase in transport costs.
The hon. Member for Romsey and Waterside said that a fear had been expressed that, if the duty were removed, avgas might be used in cars. I have received a letter from the Orkney flying club that says that the problem is perhaps the other way round. Its secretary said:
In private aviation many owners have turned to the use of car petrol in their aircraft. This saves considerably on costs, but since the control of quality on aviation fuel is very much stricter than that of car fuel, there must be a much higher risk of contamination and therefore a greater risk of accidents. All this for a very small return for the government.I hope that the Minister will listen to the strong arguments made not only in this debate, but in other representations before the Budget. The return to the Government is relatively small and the removal of this anomaly or some concession would be welcomed even at this late stage.
§ Mr. LilleyMy hon. Friend the Member for Romsey and Waterside (Mr. Colvin) has fought a vigorous and capable campaign on this issue. The House is familiar with the arguments that he has presented so eloquently, supported by the hon. Member for Orkney and Shetland (Mr. Wallace).
The dilemma is that avtur bears no duty and my hon. Friend does not want to alter that; gasoline used by motor cars is heavily taxed; and the avgas which is used by the piston-engined planes to which he referred is usable in motor cars and could be diverted to them if it was economic to do that. To prevent abuse and the consequent loss of revenue, there is a good case for having a duty on avgas. Effectively, it either has to be aligned with motor cars and considered as gasoline—gasoline for motor cars is taxed, so why should it not be when used in piston engines?—or, as my hon. Friend said, they are both used in aeroplanes—as avtur is used in aeroplanes, and that is zero-rated, avgas should be too.
When my right hon. Friend the Foreign Secretary was Chancellor he entered into a judgment of Solomon. He decided simply to split the difference and halve the rate of duty on avgas. He emphasised that he saw that duty reduction not as a halfway shift towards complete abolition, but as a final compromise solution that took account of all the arguments of those in general aviation, 480 who balanced those against the revenue burdens placed on other forms of transport, including essential ground transport.
I am afraid that there is no justification for further relief of avgas. It is, of course, a high-lead petrol and many cars could run on it, or on a mixture of avgas and petrol. Suggestions have been made that this could be prevented by dyeing and other measures, but I do not think that any of them would be satisfactory in practice and could be out of order in relation to aviation standards.
§ Mr. Gerald Howarth (Cannock and Burntwood)Avgas is already dyed, so there is no question of adding dye.
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§ Mr. LilleyThe alternative would be to make it double-dyed. It would be difficult both to mark it in a way that is identifiable when it is in a vehicle tank and to stop cars and check whether their tanks contained an untaxed form of gasoline. We do not want to go down that avenue.
My right hon. Friend the Chancellor reviews all taxes when he makes his Budget judgment every year. I cannot suggest that this is other than a final compromise solution, although as I have said, I am always open to receive visits from my hon. Friend the Member for Romsey and Waterside should he wish to renew these arguments nearer the time.
§ Dr. Alan Glyn (Windsor and Maidenhead)Colouring in petrol was introduced for the services during the war, but it never had any practical effect.
§ Mr. LilleyI am grateful to my hon. Friend, who has reinforced my argument. He provides practical evidence against the contribution of my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth). With that support, I rest my case.
§ Mr. ColvinI have listened to my hon. Friend the Economic Secretary, and I do not think that he has understood the argument, because we have had a rerun of what has been said by him and other Treasury Ministers who have been sent letters by those who have been lobbying on behalf of general aviation over the past 12 months. However, as he has made it clear that my right hon. Friend the Chancellor and other Treasury Ministers are happy to review all taxes between now and the next Budget, and that he is prepared to see representatives of the general aviation industry before he makes up his mind, I am happy to leave it in the lap of the gods and trust that where I failed to persuade him to change the duty, they may succeed. On the basis of that understanding, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.