by James Ruggia
Last updated: 4:39 PM ET, Mon December 9, 2013
On April 1, the British Government will increase one of travel's most controversial taxes, the Air Passenger Duty Tax.
A tax that will cost every Americans flying to the U.S. from London £69 per head ($113.24) up from £67 for economy class tickets.
Business and first class ADP tax will increase from £134 to £138 ($226.49). It's bad news for the 72 percent of visitors to the UK who arrive by air. Those particular visitors account for some 83 percent of all inbound visitor spending.
The tax, which has been increased six times in the last six years, has grown over time. When it was first introduced in 1994, passengers were required to pay £5 per person to fly short-haul and £10 long distance.
That two-tiered distance system has evolved into a four-tiered structure based on where you land. The bands are based on the distance from London to the capital city of the country the passenger is flying to (except for the Russian Federation which is split into both east and west of the Urals).
The tax's fee depends on which of the four destination bands (each with two rates of duty depending on the class of travel). Thus there are eight different rates of duty.
In December, some 250 chief executives wrote to British Chancellor George Osborne pointing out how the ADP was hurting the U.K.'s economy.
A hail storm of complaints from such travel industry groups as the Caribbean Tourism Organization, the Pacific Asia Travel Association and the World Travel and Tourism Council (WTTC), as well as the U.K.'s own travel industry, but Osborne, would not budge. The WTTC claims that removing the APD would result in an increase of up to £4.2 billion in GDP and the creation of up to 91,000 jobs.
A recent report from the European Travel Commission (ETC) warned that tourism taxation was "an increasingly appealing source of government revenues."
The Croatian government approved a 50 percent cut in VAT on tourism services at the beginning of this year," ETC executive director Eduardo Santander said. "This measure provided tourism businesses margin to compete on price with more cost effective destinations. International visits to Croatia grew by a promising 4 percent through August and tourism positively contributed to economic growth".
The ADP's top rate is some 8.5 times the average of other countries in Europe that still levy a charge. In a recent study by the World Economic Forum, the UK was ranked 138th out of 139 countries according to the competitiveness of its air ticket taxes and airport charges, ahead only of Chad.
According to Britain's Office of Budget Responsibility, the APD generated £2.7 billion in 2011-12.
The only other European Union countries that impose an air travel excise duty are Germany, Austria and France, while Belgium, Denmark, Holland, Malta and Sweden have abolished their air passenger taxes.
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