Azara Blog: US Embassy attacks new UK aviation tax

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Date published: 2008/06/07

The Daily Telegraph says:

Gordon Brown is embroiled in a major diplomatic row with the United States over controversial plans for new airline taxes which could see British families paying £400 extra for transatlantic flights.

An official letter sent by the US Embassy to the British Government - which has been leaked to The Daily Telegraph - reveals the Americans have "deep concerns with the proposal". They threaten the Treasury with legal action over the planned tax increase.

Ministers are planning to sharply increase the amount of money raised from airline taxes in a move that will net an extra £520 million annually.

Airlines - already struggling to deal with record fuel prices - calculate that the tax per person on a flight to America or other long-haul destinations will rise from £40 to about £100 from next year. The levy will be passed on to passengers.

The unusual attack from the Americans - ahead of a visit to Britain by President Bush next week - is understood to be causing serious concerns within Downing Street. It could lead to yet another climb-down by the Government over a major tax policy.

The six-page letter provides a detailed rebuttal of claims made by Alistair Darling, the Chancellor, that taxes on flying are being increased to produce environmental benefits.

The letter states: "The Treasury's proposal, although cast as an environmental measure, appears in reality to constitute nothing more than a device for generating additional revenue from the airline community."

"There is no linkage between the funds collected from airlines and the mitigation of any environmental impact of airline emissions or any other environmental problem ... Moreover, the Treasury's proposal does not demonstrate that the new duty would influence airlines to adjust their fleets or their booking practices to achieve higher load factors ... Nor are any data provided to justify the levy based on an assessment of damage from aircraft emissions."

The American Embassy - which is headed by Ambassador Robert Tuttle - also warns Britain that the proposed levy threatens to damage this country's competitiveness.

"The proposed duty, by raising the overall cost of flying aircraft to the United Kingdom relative to other destinations, is likely to diminish the number of flights operating to and from the United Kingdom," the official note sent on April 15th states.

"This would seem an anomalous result, however, given the focus in the United Kingdom on, among other things, restoration of the competitiveness of Heathrow Airport with the opening of Terminal 5 and consideration of a third runway."

The Americans also warn the Treasury that the "proposed duty raises serious legal concerns".

It details a number of international treaties and agreements which would allegedly be breached by the new tax raising the spectre of international legal action. The Americans have also sent the memo to other European governments.

Unbelievable, the Americans have actually hit the nail on the head. This new tax was of course dressed up as being "green" (because Labour was being nagged by the academic middle class people who run the media to be "green") but bears little relationship with the actual emissions caused by any given aircraft. In fact, that is one thing it has in common with the existing air passenger duty (i.e. tax). The only sensible "green" tax is one on airline fuel (which the Americans would also not like, of course). It is ridiculous that this is the one tax that cannot be introduced. Instead we have silly taxes whose main point is to raise revenue, and which bear little correspondence to the actual environmental damage caused by aviation.

The BBC coverage of this story is appalling. It just repeats some of the points in the Telegraph article without repeating some other crucial ones. And then at the end we get the throw-away comment:

Critics say that the tax will not affect budget airlines - as they normally fill their planes to capacity.

Who exactly are these "critics"? Are they perhaps the usual "critics" who hate airlines and spend all their waking hours trying to kill the aviation industry? After all, the only sensible point of this new tax is that indeed it would encourage airlines to fly with fuller planes. The BBC makes it sound like some sort of criminal conspiracy against the environment that the budget airlines (in particular Ryanair) already do this. The fact that they already do this (and often have newer, more fuel efficient, planes) means that, in total contrast to this cheap BBC comment, the budget airlines are generally more environmentally friendly that the long-established airlines. Of course the "critics" and BBC journalists are academic middle class people who think the peasants should not be allowed to fly, hence their particular hatred of budget airlines (in particular Ryanair) above all else.

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