UK airlines have hit back against reports calling for a fairer taxation of the aviation industry to avoid “spiralling” CO2 emissions this decade.
London-based think tank Green Alliance today called on transport secretary Mark Harper to ensure the industry is taxed appropriately.
The government’s failure to tax different modes of transport according to their environmental impact could leave Britain “unfit for net-zero,” the think tank said.
According to research from the New Economics Foundation (NEF), the aviation sector effectively receives a £7bn tax break annually as the industry exempt from paying VAT and fuel duty despite producing eight per cent of UK greenhouse gas emissions.
“Despite the huge climate impact and the fact that the richest 10 per cent of people take most of the flights, flying remains largely untaxed,” said Green Alliance’s senior policy adviser.
“The government needs to start having a conversation about how to ensure we tax different types of transport fairly.”
Trade body Airlines UK rebutted the accusations, telling City A.M. the sector pays over £4bn every year to the Treasury in Air Passenger Duty (APD).
“Therefore those who travel the most pay the most,” a spokesperson said.
APD is an excise duty levied per passenger flying both domestically and internationally from the UK.
The tax made the headlines last week after former transport under-secretary Norman Baker called for increasing APD for private jets, which are generally much more polluting than a commercial flight.
A HM Treasury spokesperson said: “Air Passenger Duty raised £3.6bn in 2019-20 and aims to ensure that airlines make a fair contribution to the public finances.
“From April 2023 a new ultra long-haul tax band covering flights that are greater than 5,500 miles from London will be introduced to ensure that those who fly furthest, and have the greatest impact on emissions, incur the greatest duty”.
Airlines UK also said the industry was working alongside the government and private investors to reach net-zero through the use of sustainable aviation fuels (SAFs) and hydrogen flights.
A byproduct of solid waste and food scraps, SAFs reduce emission by 80 per cent over their life cycle.
They are considered the main tool aviation has to become net-zero by 2050 as the adoption of greener alternatives such as hydrogen or electric plans remains a few decades away.
As of now, the UK government has invested £165m to develop eight production plants by 2025 as it aims to make SAFs 10 per cent of airlines’ fuel consumption by 2030.
“This is the way to deal with our emissions – creating jobs and huge export potential and reducing our reliance on imported fuel – rather than taxing consumers and making flying more expensive,” Airlines UK concluded.
The Labour Party declined to comment.