mnhusker

This will back fire, making London increasingly non competitive for J traffic.

Very similar to the case for not refunding VAT. UK government thought this would lead to more revenue to them and in fact what happened is less shopping in the UK for high end goods.

People wanted their VAT returned on luxury purchases , so they went to Paris, Rome, etc to buy those items and the net result was less coming in to the UK Treasury and the UK High Street is howling in protest at the lost sales.

I think the same will happen here, with LHR becoming less competitive as a hub due to ever higher fees (amongst other reasons), and AMS, CDG, FRA, etc will take up the slack.

Remember, many in J are "upgraders" where these fees have a direct effect on choice, it's not just a small part of the ticket price, bought by the passengers' company like in the past.

Arctic Troll

International to International transit passengers don't pay APD so this will have no effect on them.

But given we're constantly being told that LHR is at capacity and the only solution is bulldozing half of west London, perhaps it isn't such a bad thing if more transit passengers do go through CDG or AMS.

Interesting you refer to the VAT changes. People can still get their VAT refunded if they have their goods shipped directly from the UK to their home country. So I'd say retailers blaming VAT is also a red herring.

PUCCI GALORE

Apples and Oranges - they reduce Income Tax and everyone is affected. They raise APD? Most tax payers have never heard of it.

Let us see what eventually happens.

hfly

APD is only one of many items that most people do not break down or realize and they just figure that flight prices have risen. IF they are so dead set on raising APD, then I would suggest that they make transfers up to 48 or 72 hours? Why? I know a LOT of people that like(d) to fly via LHR to the US and have a day or two stopover in the UK in at least one direction, and I also know that many of them NO LONGER do so, because of the APD. Such people are only a plus for tourism as they spend far more in 2 days in the UK than any APD would ever earn. These people instead now go through any other connecting city than LHR.

Bohinjska Bistrica

This is a bit like saying alcohol and fuel taxes aren't high enough, even though they are indeed very high.

APD doesn't need to have a deterrent effect, it's there to raise money.

timlewis808

Usually with these kind of articles they are looking to see how much in the way of objections they get from the "possibly doing this tax" and then go with the ones that have the least pushback. So this may well happen unless the airlines really push back...

zaphod424

If they want to make more tax revenue from air travel just apply APD to connecting passengers through UK airports, it's already a strange policy not to given how congested LHR is.

Arctic Troll

'Road tax' (VED) in the UK is already higher for luxury vehicles (defined as anything costing more than £40,000) than it is for 'normal' vehicles. We see similar with alcohol excise duty.

Increasing APD for premium cabins really is the most open of open goals. Of course the objective would be revenue-raising, but with the added advantage of being able to spin it as both a luxury tax and a green tax.

AviosTreasureHunter

Me too!
I have a little tally of how much I've deprived the government of by taking ex-EUs. So far it's £1650! I have also enjoyed nice breaks in Dublin, Larnaca, Warsaw, Paris and Frankfurt thanks to this.
Also taken advantage of the Inverness trick before when I was in Aberdeen for work.

​​​​​​Adding APD for transit passengers would be very stupid. Would gift traffic to EU rivals and thus decrease the destinations count from London.
The VAT rule has just harmed retailers. Further duties just put off more tourists.
Government always use stupid logic for tax. Failing to understand you can kill the goose that lays all the eggs.
​​​​​

Jimmie76

Speaking as a someone who works in Luxury retail I cannot but agree with this. Raising the APD will doubtless only exacerbate this.

PUCCI GALORE

Please do remind me which States provide any kind of reimbursement of taxes for Luxury shopping? As far as I am aware, not even Hawaii do this even though Waikiki is not the Shopping Mall for the flocks of aircraft that arrive from Japan and Korea? It will be interesting to see what does transpire at the Budget in the light of some of this pronouncements of doom with the potential increase.

hfly

Pucci? What do US states have to do with anything?

1) The United states does NOT have VAT.
2) States have sales tax which ranges from 0% to about 10.25%, as opposed to Europe which has overall an average VAT, of over 21.6%. Perhaps you are making a EU argument, but since Brexit that ship has sailed and the UK rate is 20%.
3) Hawaii (as you mentioned it) has a whopping sales tax of a bit over 4%, 1/5 that of the UK, and 1/6 some other European countries.
4) Many large department stores throughout the US will in fact give bonafide foreign visitors, cards that get them a 10% discount (Macy's Bloomingdale's, etc) so actually more than the sales tax in many instances. Many people who are visiting 2 states will buy items in one to be shipped to the next state and pay no sales tax.
5) Most importantly though is the fact that all of your European neighbours do in fact do tax back, and the Exchequer hobbled the entire high end shopping business in the UK since Brexit. Luxury sales are down over 30%.

iahphx

Even when flying in economy on a leisure trip, I usually make it a point to fly TO the UK from America, then visit the Continent, and fly home from there. I never do the reverse, and it's always an incentive to stop in on the Continent even if the primary purpose of my trip is to visit the UK. Saves me more than $100 in taxes. I also suspect the high UK airfare taxes discourage short leisure visits from North America to the UK, as they make the total fare too high to be "worthwhile."

Jagboi

Prior to the end of VAT refunds, I was in the queue for VAT refunds at LHR and the person in front of me was getting refund of over £50,000. He wanted it in cash, not on his credit card, and they ran out of money and had to get more before they could serve more customers.

Even though it was billed as "tax free" the processing companies added a service charge , so the VAT refund was really only about 10%, not 20%. That meant the person in front of me was exporting half a million pounds worth of goods! If that person can get the VAT back by shopping in Paris instead of London that difference is a big incentive to not shop in the UK.

Jagboi

I live in a province in Canada that has no provincial sales tax. When I travel to the USA, many states will make my purchases tax exempt upon proof of residency in a tax free jurisdiction, such as a drivers license.

It's really simple; I show my drivers license at the cashier, they run a form through the till and I'm tax free. Nothing to claim and try and get back later, it's deducted at source. I should try the discount card route next time.