Air Passenger Duty and Developing Economies

Lord Pendry Excerpts

Wednesday 18th May 2011 Lords Chamber

[Lord Pendry]

My Lords, those taking part in this short debate owe great gratitude to the noble Baroness, Lady Benjamin, for initiating it. As has already been shown, the air passenger duty is generally accepted within the tourism industry as an unfair tax in its current form. The Caribbean islands certainly have a very good case. I hope that their strong message will be listened to and acted on by the Government. The air passenger duty charge made to the Caribbean is greater than that to the west coast of the USA, but the distance is shorter. I am sure that the Caribbean islands will be making strong representations to the Treasury consultation which closes next month.

If that fact is recognised by the Government, surely the case for Crown dependencies off the coast of Normandy is equally strong. As the House knows, the Crown dependencies have long since pledged their allegiance to the throne and, although they do not form part of the United Kingdom, they are citizens who hold British passports and their laws are dependent on Westminster. Certain dependent territories of EU member states are included in the scope of the lower rate, including the Channel Islands and Gibraltar. However, even at those lower rates, the air passenger duty is not proportionate. For instance, the passenger pays the same tax on a flight from Jersey to Southampton as one who travels from Glasgow to Crete, irrespective of the age of the aircraft or fuel efficiency. Both have a £12 per passenger air passenger duty charge when flying economy class, yet the Crete route is 16 times the length of the Jersey flight. Surely any tax should be based on the emissions of the actual aircraft type, and tax should be banded by distance travelled. The negative economic impact of the air passenger duty has been well documented already in this debate. I just add that, in the case of the Crown dependencies, such as Jersey, the tax does not impact on holidaymakers alone. There is a significant diaspora in the UK who regularly travel to the island and local businesses are dependent on affordable flights to maintain important links with the mainland.

Will the Minister clarify what obstacles there are to making special provision for air passenger duty paid on flights to the Crown dependencies and overseas territories? Are there any constitutional or competition implications for making such special provisions? I look forward to receiving the Minister's response to that point.