Select Committee on Treasury Written Evidence

Supplementary memorandum by Mr John Whiting, PricewaterhouseCoopers

  Reflecting on the discussion with the Committee on the proposed Air Passenger Duty increase[3] there is another issue that needs consideration—namely whether the notice period before the increased amounts take effect is sufficient.

  Clearly a date has to be set and, as the duty is one on flights, it is logical that the increase applies to flights taken from that date. However:

    (1)  many people who had already booked flights and holiday packages formed the initial impression that the increases did not apply to them; and

    (2)  travel operators are faced with the administrative burden of charging and collecting the additional duty from such people, as well as making system changes to cater for the increases for the future.

  On the previous occasion when Air Passenger Duty was increased, over 12 months notice was given—the announcement in Budget 2000 foreshadowed a change from April 2001. There would have been hardly any existing bookings affected by the change.

  This time, with less than two months notice, operators have a considerable administrative burden to shoulder in respect of existing bookings—or are faced with having to absorb the additional duty themselves. (There have also been suggestions that regulations on surcharging passengers may make it difficult to impose the additional duty.) It would seem appropriate to question the Treasury over the period of notice—has a proper balance been struck between the desire to raise additional revenue and the burdens, administrative and financial, placed on the industry? It seems, at best, doubtful whether it has been.

14 December 2006

3   Q 115 Back

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