A study commissioned by the UK’s four major airlines claims abolishing APD could generate more tax and create 60,000 jobs.
The study by PricewaterhouseCoopers (PwC), The economic impact of Air Passenger Duty, used a model to simulate how changes in one area of the economy (such as tax policy) affects all the rest.
It found that:
- Abolishing APD could boost UK Gross Domestic Product by 0.46 per cent in the first year, with continuing benefits to 2020.
- The boost would amount to at least £16 billion in the first three years and result in almost 60,000 extra jobs in the longer term.
- Abolishing APD would pay for itself by increasing revenues from other sources such as income tax and VAT. This net benefit, even after allowing for the loss of APD revenue, would be almost £500m in the first year.
The report claimed the boost to GDP would come from airline investment and inbound tourism as well as increased business travel and international business connections.
It adds: "Abolishing APD has the potential to reduce the cost of flying, making it cheaper for businesses to maintain relationships with overseas customers. In this sense APD could be regarded as a tax on exports."
British Airways, easyJet, Ryanair and Virgin Atlantic welcomed the report, adding it proved that APD is one of the three most destructive taxes; alongside Corporation Tax and Fuel Duty.
Willie Walsh, chief executive of British Airways’ parent company, IAG; Carolyn McCall, chief executive easyJet; Michael O’Leary, chief executive Ryanair and Craig Kreeger, chief executive of Virgin Atlantic said in a joint statement:
"The Chancellor has taken action on those two taxes in the Autumn Statement and we would encourage him to use the forthcoming Budget to remove APD to stimulate economic growth and create jobs.
"The PWC report highlights the critical role that aviation plays as an engine of economic growth for both international commerce and tourism.
"It confirms that abolishing APD would provide the UK economy with a much needed boost creating 0.46% GDP in the first year and at least £16 billion in the first three years and would also result in almost 60,000 new jobs in the UK."
