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UK aviation industry gets away with £9 billion public subsidy

The UK taxpayer is missing out on over 9 billion pounds a year in tax breaks and subsidies which currently benefit the aviation industry Friends of the Earth Cymru revealed today (1). The environmental campaigners have called on the Government to make the industry pay its own way, and spend the tax revenue generated and the subsidy saved on improving public transport and other essential public services across the UK.

The aviation industry benefits from a variety of tax breaks and subsidies including no tax on aviation fuel, exemptions from VAT on flight tickets, new aircraft purchases and duty free shopping. Friends of the Earth Cymru has calculated an additional amount that could be available for national and local authority budgets in Wales if a proportion of the potential tax revenue generated and subsidy saved were put to public use. On a per capita basis Welsh taxpayers are missing out on about £450 million pounds of revenue a year (2). Much of the revenue would be in the form of aviation fuel duties which would help moderate the globally unsustainable growth in air travel which is a fast growing source of global warming emissions.

The Government is soon to publish its airport expansion plans and current DTI growth forecasts could mean the equivalent of a new Stansted sized airport being built every year for the next 30 years. Friends of the Earth has shown that no new airports or runways would be needed if this highly polluting industry paid a fair and necessary tax on its fuel and tickets.

Commenting on the figures Friends of the Earth Cymru aviation campaigner, Neil Crumpton, said:

"UK taxpayers are missing out on billions of pounds each year to the aviation industry, potentially over £400 million a year from taxpayers in Wales. This is an unfair economic practice benefiting one particular industry sector and should be stopped. Such large revenues would be far better spent on improving public transport, health, education and other essential services, not subsidising air travel which is a seriously growing source of dangerous global warming emissions, much of which is leisure related."

There's still time to influence the Government's plans and we ask the public to contact or e-mail their MP's and Assembly Members requesting them to sign the Early Day Motion calling for a sustainable aviation policy. Politicians may be listening after the outcome of the Brent by-election and ending the tax breaks is a sizeable solution to some serious problems."

Notes

[1] The £9.2 billion subsidy is currently calculated as follows:

• Fuel tax @45.8p per litre (the same rate as applied to car fuel) would raise:- £5.7 billion
• VAT applied to all aspects of aviation would raise:- £4.0 billion
• Abolishing Duty Free would raise:- £0.4 billion
• Deducting Air passenger Duty (currently £5 or £10 per ticket) minus £0.9 billion
• Current Net Subsidy = £9.2 billion

[2] Friends of the Earth worked out the how this £9.2 billion subsidy could be allocated to Wales, Northern Ireland and the English regions using a simple pro rata basis based on population size. The figures do not therefore take into account the concentration of flights in the South East, they merely provide an illustration of what the national subsidy means at a local level.

The figures for Wales are as follows:

• UK population 58.790 million,
• WALES population: 2.903 million,
• UK subsidy £9.2 billion
• APPORTIONED SUBSIDY: £ 454 million