CBI slams plan to replace passenger duty with new plane tax

Government plans to introduce a "per plane" tax to replace air passenger duty (APD) would be "ineffective and damage competitiveness", business leaders warn today.

A global "cap-and-trade" scheme was the best way for aviation to meet its climate obligations, the Confederation of British Industry said. The Government is considering bringing in a per-plane duty instead of the APD airport departure tax which is set to rise this autumn.

In a report today, the CBI said that an overall cap on aviation emissions should be agreed. Airlines would be allocated permits to cover their emissions, and if they exceed their permitted level of emissions they would have to purchase surplus permits from companies that have made extra progress in reducing their emissions.

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CBI deputy director-general John Cridland said: "The coalition Government should be wary of introducing a domestic 'per plane' duty to replace APD.

"It would be ineffective, damage competitiveness, and would distract from the important goal of establishing a global cap-and-trade scheme."

He went on: "Aviation is an economic enabler like no other industry. Britain can only be truly open for business when it has access to foreign markets to exploit investment opportunities and trade goods and services. The recent disruption caused by volcanic ash demonstrated just how much aviation underpins our modern economic life.

"While aviation emissions still only make up a small percentage of total UK emissions, strong future demand for flights means they are expected to rise.

"Growth in the aviation industry will need to be sustainable for the UK to meet its longer-term aim of an 80 per cent cut in overall emissions by 2050."