Millions are at risk of being hit with a covert increase in travel costs if Chancellor Rachel Reeves decides to hike the Air Passenger Duty, which is infamously labelled the “holiday tax”.
Speculation is rife after Treasury officials were reported to have asked for data from the Department for Transport to determine if such an increase is manageable for the sector. With eyes on the Chancellor, it’s thought this duty may become her aim as she seeks to fill the £22billion fiscal void left by the previous Conservative Government.
Any rise greater than inflation would likely result in higher flight costs for consumers.
The impact could see British families paying out additional sums in the hundreds of millions for their getaways, even though travel companies are resisting these potential changes in the interest of holidaymakers. Ryanair’s Michael O’Leary has hinted at cutting numerous routes to ‘not particularly profitable’ destinations in response.
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The airline chief claimed: “Air Passenger Duty is a penal tax on the poor. The rich don’t care. In a post-Brexit environment, the UK needs to stimulate inward tourism.”, reports Lancs Live.
An anonymous source in the industry shared with the Daily Mail that they’re expecting an “above-RPI” tax spike. Meanwhile, Helen Whately, the Conservative transport spokesperson, cautioned that Labour will be reminded of their commitment to not raise taxes on working-class individuals.
A spokesperson for the Treasury addressed the forecast of a tax hike beyond inflation, stating: “The Chancellor has been clear that difficult decisions lie ahead on spending, welfare and tax to fix the foundations of our economy and address the £22billion hole the Government has inherited.”
At present, the levy is imposed on all departures from UK airports, meaning inbound flights aren’t subject to the tax, which operates on a three-tier system. This system taxes flights based on distance and the carbon emissions produced.
Economy short-haul flights under 2,000 miles are taxed at £13, or £26 if flying business, increasing to £88 and £194 for medium-haul up to 5,500 miles in economy and business classes, respectively, with long-haul rates at £92 in economy and £202 in business class.
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