§ First, air travel is under-taxed compared to other sectors of the economy. It benefits not only from a zero rate of VAT; in addition, the fuel used in international air travel, and nearly all domestic flights, is entirely free of tax. A number of countries have already addressed this anomaly.
§ I propose to levy a small duty on all air passengers from United Kingdom airports. This will be set at £5 for departures to anywhere in the United Kingdom and the European Union; and £10 for departures to other destinations. The new duty will come into force next October, and will raise some £330 million in a full year. There will be exemptions for transfer passengers and small planes. This means, for example, that most flights between the Scottish islands will not bear tax.