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Chancellor rebuked over air passenger duty

Commons committee criticises timing of move


A plane in the sky

Chancellor Gordon Brown was rebuked by MPs today over the timing of his decision to double air passenger duty (APD).

The cross-party Commons treasury committee said that the Treasury had failed to cite any relevant precedent for Mr Brown’s decision to give less than two months notice of the increase.

As a result, thousands of passengers who had already booked tickets have been hit by demands from the airlines for the additional duty.

The committee also complained that the ‘unusual’ timing of the increase meant that it would come into force before the Commons had a proper chance to consider the measure.

Air passenger duty

The decision to double air passenger duty from 1 February was announced by Mr Brown in his pre-budget report in December last year, just eight weeks before it was due to take effect.

It provoked a storm of protest from the airlines – most of which chose to pass on the increase to passengers who had already bought tickets from February onwards.

The increase will mean a rise from £5 to £10 for economy-seat passengers on domestic and European routes, with the APD rising from £20 to £40 for economy-seat travellers on long-haul flights.

Business and first class passengers will face bills of £40 for short-haul flights and £80 for long-haul.

The committee acknowledged that immediate tax increases were in some cases justified to pre-empt avoidance measures or activity that could distort the market, but said that did not apply in this case.

It pointed out that when the last significant increase in air passenger duty was announced in 2000, airlines and passengers were given more than a year’s notice before it came into effect.

Pre-budget report

At the same time, it said that because the increase was announced in the pre-budget report rather than the budget, it would come into force before MPs were able to consider it through the Finance Bill.

‘As a general rule, we consider that, where increases in rates of duties or taxes are proposed in the pre-budget report, those increases should not come into force until after the House of Commons has had the opportunity to come to a formal decision on the proposed increase following the budget,’ the committee said in its report.

‘We draw the attention of the House of Commons to the unusual timing of the implementation of the increases in air passenger duty, for which the Treasury has not cited any relevant precedents.’

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