Air Passenger Duty (Hansard, 19 July 1999)

§ Lord McIntosh of Haringey
My Lords, I am not aware that the European Commission is anticipating that Her Majesty's Government are going to increase air passenger duty. Any decision about the setting of rates of duty is a matter for the Chancellor of the Exchequer.

Lord Campbell of Croy
My Lords, I am pleased to hear that reassuring reply. Is the noble Lord aware that if the European Commission's proposal were to be adopted, the recently introduced poll tax on passengers would be doubled in relation to return tickets. For short domestic flights the tax would be nearly 50 per cent of the cost of a return ticket. Is that consistent with an integrated transport policy?

§ Lord McIntosh of Haringey
My Lords, the European Commission has not made a proposal. Last year it gave a reasoned opinion in which it challenged the domestic return leg exemption to which the noble Lord refers. How that is implemented is a matter for the Chancellor of the Exchequer. The Commission does not dictate the solution. Currently, negotiations are taking place in relation to a number of options.

§ Lord Moynihan
My Lords, we on these Benches have no criticism of the air passenger duty, which my colleagues introduced. However, last Friday, why did the Government feel it necessary to commit to a substantial extension of our obligations to give relief from APD and include, among others, employees of the International Rubber Study Group, the International Lead and Zinc Study Group and the European Centre for Medium Range Weather Forecasts?

§ Lord McIntosh of Haringey
My Lords, I am glad that the noble Lord accepts responsibility for the air passenger duty which his noble friend—not I—called a poll tax on air passengers. I would not dream of using such prejudicial language. I am interested to hear what the noble Lord says about further possible exemptions. Many possible options are being considered, but there is an international obligation under the Treaty of Rome of which the noble Lord is well aware.

§ Lord Gordon of Strathblane
My Lords, in considering the options, can I invite the Minister to consider the 652 possibility of a reduction, or indeed the abolition, of the APD at certain regional airports? I understand that that would be legal provided it is abolished on all flights out of such airports. I should declare an interest. I am chairman of the Scottish Tourist Board, having been appointed by the noble Lord, Lord Forsyth of Drumlean. Along with every other body in travel and tourism, the Scottish Tourist Board is extremely concerned about the deleterious effects of this tax, which was introduced by the previous government, on travel and tourism to Britain.

§ Lord McIntosh of Haringey
My Lords, I hear what my noble friend says about the exemption of particular airports. It is true that in our discussions with the European Commission we are considering all options. I am sure that my noble friend would agree that one of our objectives must be to have simplicity in the application of air passenger duty.

§ Lord Monson
My Lords, would the Minister agree that air passenger duty—unfortunately introduced by the previous government, but doubled by the present Government—is one of the most regressive taxes we have? Is he aware that the effective rate of tax on a one-way Concorde flight to New York or first-class flight to Tokyo works out at just over one-half of 1 per cent, whereas the effective rate of tax on a one-way flight on a no-frills airline to Glasgow works out at almost 53 per cent, about 100 times as much? How does that square with the principles of New Labour?

§ Lord McIntosh of Haringey
My Lords, the decision to double air passenger duty was taken by the previous government and merely implemented by this Government.

Noble Lords
Answer the question!

§ Lord McIntosh of Haringey
I shall certainly answer the question. The noble Lord makes a perfectly valid point about preferring an ad valorem duty, which would be a percentage of the fare rather than a flat tax. Indeed, that is a consideration which the Government are taking into account.

Lord Bruce of Donington
My Lords, is it not valid to argue that the tax should be abolished altogether?

§ Lord McIntosh of Haringey
My Lords, the Treasury does not like abolishing taxes if it can possibly avoid it. They bring in revenue which would have to come from somewhere else. That is a matter for the Government and not a concern of the European Commission.