Lord Palmer
To ask Her Majesty’s Government why the air passenger duty on private jets will not be implemented until 2013.
Lord De Mauley
My Lords, from April 2013 air passenger duty will for the first time cover passengers travelling aboard private or business jet flights. The changes will bring a substantial number of new operators into the regime and will require the introduction of special rules, tailored to business aviation. Given that the sector comprises many small operators, the Government decided to implement the change from 2013 in order to ensure that burdens both for HMRC and industry were minimised and that the system functions effectively.
Lord Palmer
I thank the noble Lord for that reply. Can he categorically confirm that every single private jet will in fact be liable for APD after 2013?
Lord Trefgarne
My Lords, can the noble Lord tell me how far down the scale this tax will go? For example, if I still had a little two-seater, would I be liable?
Lord De Mauley
My noble friend will be very pleased to hear that his two-seater, provided it is propelled by a propeller, will be exempt.
Lord Morris of Handsworth
My Lords, in light of the Question on the Order Paper, do the Government now accept that the air passenger duty was falsely promoted as a positive measure towards mitigating climate change? Is it not just a Robin Hood tax in reverse whereby the Government take from poor families in the Caribbean, as we heard earlier this week, and give to bankers through subsidising their private jets?
Lord De Mauley
My Lords, that is quite a question. The Caribbean issue was addressed extensively when my noble friend Lord Sassoon answered questions on Monday. As regards whether it is a tax dressed up as an environmental duty, broadly speaking I agree with the noble Lord. It is a revenue-raising duty which makes an important contribution to the public finances.
Baroness Benjamin
My Lords, BA has cut scheduled flights to the Caribbean. Travel agents that serve the region are feeling the pinch as fewer people are travelling, meaning a loss of APD revenue to the Treasury. However, last week the Foreign Secretary, William Hague, stated at the UK Caribbean Forum that the Government had not closed the door on further discussions with regard to APD. That is most encouraging, especially to the UK Caribbean diaspora who feel betrayed. However, in the mean time, will my noble friend tell the House what plans the Government have to provide economic support to the Caribbean now that many livelihoods are threatened by the unfair banding of APD?
Lord De Mauley
My Lords, I recognise the importance that my noble friend places on this issue. As I said, the question of the Caribbean was addressed extensively by my noble friend earlier this week. I have nothing to add at the moment but as soon as I do, I will bring my noble friend up to date.
Lord Berkeley
Is not this air passenger duty a way for the Government to levy an environmental charge on the carbon discharged by airlines? Does the noble Lord agree that this is fair given that airlines get tax-free fuel whereas all motorists and truck drivers have to pay a large duty?
Lord De Mauley
I have said that it is a tax. I am not prepared to go further than that.
Lord Mawhinney
My Lords, given my noble friend’s answer to the noble Lord, Lord Morris, and that this duty will not come in until 2013, does that not give the Government the opportunity comprehensively to review the whole issue of this duty and perhaps to come up with a tax in its place which promotes UK growth, is less damaging to the competitiveness of UK carriers and is explained in a way that moves away from relying on an essential environmental message, which, frankly, few now believe, to some explanation for the tax that is more credible?
Lord De Mauley
My Lords, we have recently gone through a full consultation exercise on this. In answer to my noble friend’s question about the effect on the economy, the Government’s top priority remains to tackle the fiscal deficit. That means that these APD revenues must be maintained for the foreseeable future. The Government believe that the aviation sector should continue to make a fair contribution to the public finances.
Lord Davies of Oldham
My Lords, both the noble Lord today and the Minister on Monday made it absolutely clear that this tax is about revenue-raising. Why, therefore, has he indicated this concession for private jets, while the tourism industry, particularly in relation to the Caribbean, is being affected adversely? Why are the Government not consistent in their approach to industry?
Lord De Mauley
My Lords, I am speechless that the noble Lord opposite, who was an esteemed member of the previous Government who did nothing about the taxing of business jets for 13 years, should raise the issue at all.
Lord Swinfen
My Lords, will passengers who are taken up for a jaunt, and who take off and land at the same airfield without stopping elsewhere, still be liable for this duty?
Lord De Mauley
My Lords, I am struggling to think of a situation where that might be practicable, but I think the answer must be yes.