The UK Treasury has opened a consultation into the impact of Air Passenger Duty (APD) and Value Added Tax (VAT) on the travel industry, particularly in Northern Ireland.
Power to set APD rates on departing long-haul flights was given to the Northern Ireland Assembly, which set the rate at £0 in 2013. The government says it wants to understand what effect the decision has had on the air travel industry and tourism as a whole, particularly since few airlines have established direct long-haul routes from Northern Ireland.
Airline bosses and industry leaders have long called on the government to consider reducing the air tax for all fare types – APD has been frozen on short-haul flights since 2015, but duty on long-haul flights is increasing again from April and is currently the highest rate in Europe.
It is also looking into the impact of VAT, which was temporarily reduced to 9 per cent on several tourism-related activities such as hotels and restaurants in the Republic of Ireland in 2011.
The government has called on those in the tourism and hospitality sector to present their views on the impact of APD and VAT, including airlines, hotels and business visitors and events suppliers.
The news has been welcomed by UKinbound, with chief executive Dierdre Wells saying: “It is encouraging that a review has been confirmed into the impact if APD and VAT on tourism in Northern Ireland. Along with our tourism partners, we will be calling on all those in the industry to submit evidence they have that demonstrates its negative impact.”
However, campaign group A Fair Tax on Flying said the chancellor's comments fell short of what the UK actually needs.
Spokesman Tim Alderslade commented: “The Chancellor’s remarks on APD were largely confined to how it might be affecting tourism in Northern Ireland. While this is an important point, our high rate of APD is affecting tourism and trade UK wide, not just in Northern Ireland.
“UK APD is the highest tax of its kind in the world. This makes no economic sense as Brexit gets ever closer. Whilst we welcome the confirmation that APD affects tourism and trade in his remarks, we will be pressing as a matter of urgency for the scope of the consultation to be extended to cover England and Wales too.”
Full details of the review can be seen here.