How can it not be regressive? Wealthy business person taking short haul flight is not going to notice the £20 or whatever, it'll be a tiny %age of his income.
I think I agree with you that it's regressive, but not for that reason. If the fare with with the £13 short-haul economy APD is associated with a fare which his less than half of that on which is levied £26 for short-haul non-economy seat, then it's regressive, and I think this is often the case. If the non-economy fare is less than double the economy fare then it isn't regressive. It's not a tax on income, it's a tax on a service, and the cost of the service is what it should be compared with. That's one angle at least. Clearly any flat tax is “regressive” when compared with income of course, assuming everybody pays it (which is of course a wrong assumption for any tax which one can choose to pay or not, such as APD). It's similar to the argument about VAT being progressive or regressive … millionaires spend an awful lot of VAT on expensive cars and dining out, I'll warrant, … but their VAT spend as a proportion of income, … well, it just depends how high you go!
I totally agree with the sentiment though. Adding VAT on air fares and abolishing APD would be “fairer” from this perspective. Problem with that, though, is that it doesn't provide the same nudge to the airlines to fly with fewer empty seats (unless APD remained vestigially being charged on the empty seats only!) … and would be likely to be straightforward to work around, given the international structure of many airlines and ticket sales companies.
Poorer family of 4 going on an annual summer holiday is definitely going to notice the £80 though, which will be a much larger %age of income.
£52, probably a larger proportion of after-tax income than the £104 paid by the business-class-travelling family, yes (and of course if the latter travelled economy then it must be).
An increase in the higher rate (which seems sensible to me) would alter the progressive/regressive question a bit but would only move the line, not solve the problem.
Without income-geared VAT (or other equivalent purchase taxes), though, how do you suggest this circle be squared? Nobody's managed it yet in this context nor any other! Simply increasing income tax for higher earners is the only known way. Targetted taxation on products and services bought by the wealthy is already well-used, e.g. stamp duty banding to hit more valuable houses, and that's the principle used with APD too, clearly. Higher APD on non-economy seats is less regressive than flat APD.
Few people take business on short haul these days, does BA even offer it?
Yes. Economy £78 return LHREDI vs £213 business class LCYEDI on same dates, for example. So in this case VAT would be “more progressive” than APD since the business class fare is more than double the economy fare.
I don't even know what the point of it is. It's definitely not environmental because you get charged the same running a virtually empty 707 as you do flying a brand new 100% load factor A320NEO.
How can it not be environmental? Person taking flight pays extra £13 (or £26 if they're taking more space/mass in the plane) to use mode of transport which emits more CO2 per passengerkm than some other mode. Tax discourages use of environmentally damaging mode … although it's worth noting from
http://www.aef.org.uk/downloads/Grams_CO2_transportmodesUK.pdfthat “large car with one passenger” emits more CO2 per passengerkm than an aircraft, from London to Edinburgh, … so perhaps the APD on the expensive seats should be /reduced/ from an environmental perspective!
(of course fuel duty is already there to act as a tax geared on fossil fuel consumption by the car).
http://researchbriefings.files.parliament.uk/documents/SN00523/SN00523.pdf is an interesting read, on “Taxing Aviation Fuel” which would clearly be an obvious way to improve matters from an environmental perspective, but is fraught with difficulty.
Documents attached for reference in case they disappear from the web …
