HL Deb 30 January 1995 vol 560 cc1257-8

3.3 p.m.

Lord Brabazon of Tara

asked Her Majesty's Government:

Whether they are satisfied with the operation of air passenger duty.

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Henley)

My Lords, yes. The duty will yield some £315 million in a full year. The consultation process, which began after the November 1993 Budget, is continuing and some significant changes to the duty have arisen from that consultation and have been welcomed by the air transport industry.

Lord Brabazon of Tara

My Lords, I am grateful to my noble friend for that Answer. Is he aware that it is a most complicated duty to collect? The duty is supposed to be £5 in respect of journeys to the European Community and £10 in respect of journeys elsewhere. However, is my noble friend aware that as regards flights to Norway, a country which decisively rejected membership to the European Community, the duty is only £5? Furthermore, when travelling to Switzerland, one pays only £5 on a journey to Geneva or Basle but £10 on a journey to Zurich.

Is it no wonder, therefore, that the cost of collection is estimated by British Airways to be more than £11 million per year for that company alone? Would it not be reasonable if the airlines were allowed to offset the cost of collection against the duty payable or if there were a more simple means of collection?

Lord Henley

My Lords, my noble friend implies that the tax is complicated. In fact, it is simple—£5 in respect of flights to EU or EEA countries and £10 in respect of flights elsewhere. That is why in respect of Norway, which is an EEA country, the duty is £5.

As regards airports in Switzerland, I am advised that Basle and Geneva straddle the border between Switzerland and France. It was decided, therefore, that for pragmatic and simpler reasons—one did not know into which country the passengers would offload—to treat passengers as though they were exiting into France and to charge £5. Zurich is totally in Switzerland and therefore outside EEA.

I am not prepared to accept the figure which my noble friend gave relating to the cost of collection to airlines. I appreciate the airlines' anxieties relating to the cost and that is why, following discussions between the airlines and Customs and Excise, it was agreed that we could use a special accounting system for air passenger duty that allows airlines to use samples and surveys of passengers. That will simplify procedures and keep costs down. I am confident that modern information technology should enable them to do the job relatively cheaply.

Lord Eatwell

My Lords, is the Minister aware that this tax is being levied in an inequitable and arbitrary manner? Is he aware that, for example, as regards the same round-trip journey between London and Glasgow, if the journey is made on a three-day return ticket the tax is £5 but if it is made on a return ticket valid for more than three days it is £10? Will the Minister explain that extreme difference in taxation on the same journey?

Lord Henley

My Lords, it is simply a question of keeping such a tax as simple as possible. The noble Lord and others may laugh but there comes a point when a return journey ceases to be a return journey and becomes two separate legs of two different journeys.

Lady Saltoun of Abernethy

My Lords, will the Minister explain why, as regards my return journey from Aberdeen to London, leaving on Monday and returning on Friday, which is five days later, the tax is only £5?

Lord Henley

My Lords, I must take further advice on the matter because I am getting different figures from the noble Lady and the noble Lord. If the House will bear with me, it must accept that there are occasions when a return journey is one journey, and can be seen as that, and when it is not that but two journeys.

Forward to