The government will gain around £3.2 billion from Air Passenger Duty in 2014/15.
Industry campaigners claim this puts it among the top yielding stealth taxes, despite recent positive reforms to the tax on long-haul flights.
Renewing its calls for an urgent review and reduction of APD ahead of next year’s general election, A Fair Tax on Flying estimates £1 billion of last year’s £3 billion in air tax was raised by leisure travellers.
With a family of four now paying on average £52 in taxes for short-haul flights and £276 on long-haul to favourite destinations such as Florida, or £340 to destinations such as Jamaica, India and Pakistan, the campaign is arguing that the tax is out of step with the government’s own family test.
It estimates that air passengers have been taxed by more than £27 billion since the introduction of APD 20 years ago.
This figure comes as new research shows that a family of four taking one holiday a year in Europe, with an occasional trip to a long-haul destination such as the US every fifth year, would have paid an “inflation-busting” £1,244 in the life of APD.
Airport Operators Association chief executive, Darren Caplan, said: “Two decades is a long time for such an eye-wateringly high and regressive tax to be in place, and the huge Treasury revenues revealed today give a clear indication of why the government is reticent of challenging the status quo.
“We believe this is short sighted: air passenger taxes, like APD, are proven to harm national economies, and the government now needs to get us in step with our competitors, to boost jobs, growth and UK connectivity.”
APD was introduced by then Chancellor of the Exchequer, Kenneth Clarke, in the 1993 Budget, and it was levied from the following November at £5 for flights within the EEA and £10 elsewhere.
It has risen at around four times the rate of inflation over the same period for short haul and at a 20 times the rate of inflation for long haul and is now the highest tax of its kind anywhere in the world.
As well pushing up the cost of business travel through the UK, APD also makes foreign travel less affordable for holidaymakers, especially for families, who receive no tax ‘break’ on children’s flights, as for other goods and services, the industry campaign group argues.
People flying from UK airports pay as much as five times the amount in departure duties than if they flew from competing airports in Germany, France, Italy and Austria. Out of 28 EU countries, only four others levy some form of air passenger tax.
Ireland, Belgium, Denmark, Holland, Malta, and Norway have all scrapped their equivalent air taxes in recent years, and Germany has frozen its.
The campaign is calling on the UK to bring the policy in line with competitors in Europe.
Abta chief executive, Mark Tanzer, said: “After 20 years, APD seems to have become entrenched in the revenue-raising arsenal of the Treasury, yet it fails to meet so many of the government’s own aims, both to support families and build our economy.
“For the sake of vital jobs, growth and the very valuable investment families make into visiting friends and relatives, a serious look at reforming and reducing this unpopular and harmful tax is now needed more than ever.”
Dale Keller, chief executive of BAR-UK, said: “We are confident that a Treasury led review of APD would confirm the damage being done to our economy and the UK’s global competitiveness.
“We believe that an urgent re-examination will reveal the very real opportunity to raise more revenues in the longer term through stimulating the economy.
“In light of 20 years that the duty has grown disproportionately and inhibited growth, we urge the Chancellor to do more to support business and ordinary consumers and reform the tax.”
British Air Transport Association chief executive, Nathan Stower, added: “It is a scandal that an island trading nation like the UK still has the world’s highest tax on flying despite recent positive changes to long-haul rates.
“Few countries have followed the UK’s example in taxing air passengers and policymakers should stop and consider why. Countries such as the Netherlands and Ireland have abolished their equivalent taxes having recognised their damaging economic impact.”
Sourced from Travel Weekly