U.K. Cuts ‘Crazy’ Air Passenger Tax to Aid Exports and Tourism

U.K. Chancellor of the Exchequer George Osborne said he will cut air passenger duty for long-haul flights to bring them into line with flights to the U.S.

Osborne said the “crazy” anomaly that means people flying to China and India pay more than those flying to Hawaii would be scrapped.

“From next year, all long-haul flights will carry the same, lower, band B tax rate that you now pay to fly to the United States,” he said in his annual budget speech to Parliament in London. The current system “hits exports, puts off tourists and creates a great sense of injustice among our Caribbean and South Asian communities here in Britain.”

The two highest bands for duty for flights to countries more than 4,000 miles (6,436 kilometers) from Britain will be cut, reducing taxes for flights to China, India, Brazil and other emerging markets, the Treasury said.

“This is window dressing a tax that even George Osborne says is ’crazy’,” International Consolidated Airlines Group SA (IAG), owner of British Airways, said in a statement. “It still punishes families and costs U.K. jobs. The only long-term solution is to scrap APD in its entirety and allow the aviation and tourism industries to flourish, to the benefit of the wider UK economy.”

Air passenger duty is still the highest aviation tax in the world, the airline said.

The governmment will also increase support for the development of new routes from regional airports, including Liverpool, Leeds and Inverness, Osborne said.

To contact the reporter on this story: Thomas Penny in London at tpenny@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net Andrew Atkinson, Eddie Buckle

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