SCRAPPING air passenger duty (APD) would end up benefiting the public purse, according to research conducted by PwC and commissioned by airlines.
If the government ended the controversial levy on air travellers entering or leaving the UK, the subsequent boost to businesses could lift GDP by 0.46 per cent this year, the study by PwC claimed yesterday.
The rise in business activity would more than offset the amount raised by APD each year, leading to a net gain of £500m a year in the first two years for the exchequer, it adds.
The Treasury expects to take £2.9bn in air passenger duty in 2012/13, rising to £3.9bn by 2017/18.
PwC’s report, which comes just over a month ahead of George Osborne’s next Budget, was commissioned by four of the UK’s biggest airlines.
British Airways, Virgin Atlantic, Ryanair and EasyJet put aside rivalries in 2011 to jointly lobby for the end of APD through their “Axe the Tax” campaign.
The levy has long been a bugbear of the travel industry, and sparked a fresh wave of criticism when it rose by eight per cent last April.
APD costs between £13 per passenger on a short-haul flight and £92 for long-haul journeys.
“The government must urgently review the report’s recommendations ahead of the upcoming Budget,” said Mark Tanzer, chief executive of the Association of Britsh Travel Agents.
The four airlines said in a statement: “Should APD be abolished the aviation industry would be able to move quickly to add new flights in and out of the UK, or invest in new products and services, creating new opportunities for businesses and much needed jobs across the UK.”
The report claims that 60,000 jobs would be created if the tax gets the chop in the Budget.