Flying - not for the poor

It is good to see my colleague, Donald Manford, laying into the latest ridiculous policy pronouncement from the Tories which will effectively have us priced out of the market.

Ill thought-out, it has the distinct prospect of being ineffective, regressive and unable to achieve it's aims, but that seems to be par for the course these days.

Adding VAT will allow business travellers to continue without any concerns, whilst the inability to exempt peripheral areas will penalise us and make us more dependant on Government largesse i.e. grants, and less able to compete.

Objectively, the increase in APD - with the exemptions for the islands - is better economically and environmentally, but not the whole answer.

Airplanes pay no duty or VAT on their fuel, despite it being heavily polluting, and the reason given for this is that planes will fill up abroad if the UK imposes duties. It looks feels and smells like big business doing special pleading again.

The answer is that we must accept that flying has an environmental cost and charge duty on aircraft fuel based on the capacity of the aircraft when it lands in a UK airport. There is then no incentive not to refuel in the UK, and with exemptions for the islands* we would have an environmentally responsible policy.

Now, of course, this might result in some traffic going through Schippol (for instance) instead, but how long before the rest of Europe follows suit and the EU has a sensible policy. Big business will claim it will deter business from coming to the UK, but as the finance sector doesn't need people to commute from Frankfurt to London to earn money, I think that this is a fallacious argument.

The yield can be pumped into public transport - not new roads! - to retain and develop businesses, and everyone is a winner.

Contrary views welcome.

* I have long argued that the islands should be a fuel duty-free zone, like the Canaries (I'm working on the weather) to encourage economic development at a very low cost. Leakage e.g. duty paid petrol is exceptionally unlikely, and will happen around the margins, and the concept could be extended to other goods and services over time.