Chancellor Alistair Darling’s pre-budget report ushered in a number of new plans and initiatives to drag the UK out of an impending recession.
The major changes for the public will be a 2.5 per cent drop in VAT to 15 per cent and the new income tax bracket of 45 per cent for those people who earn over £150,000 a year.
The chancellor also announced changes for the travel industry, with a last minute alteration to Air Passenger Duty (APD). The government has decided to scrap plans for an aircraft duty and instead will reform its current APD scheme for flights from next year.
A new four-band APD will come into effect from 1 November 2009. The four bands will be based on how far a passenger has travelled from London.
Each band will go up in 2,000 mile increments, so a cheap flight to Turkey will be classed as Band One because it is less than 2,000 miles from London. On the other hand, a trip to Cancun, Mexico would be classified as Band Three, as it is a 4954 mile trip from London.
There had been support previously to reform APD to a “tax per plane” scheme rather than a “tax per person” plan which currently operates. According to the BBC, Mr Darling said that a “tax per plane” system would harm the aviation industry. “Instead APD is to be reformed so that those who travel the furthest – and who have the bigger environmental impact – meet the cost,” the BBC reported.
Low cost budget airline Ryanair condemned the pre-budget report, in particular the announced increase in APD for short-haul traffic from £10 to £11 in 2009 and a proposed further increase to £12 by 2010.
Ryanair claimed the move was “regressive” and “damaging to the UK tourism industry” in a statement released earlier today. Ryanair’s deputy chief executive, Michael Cawley hit out against the government, saying: “This Govermnet must realise that it can’t tax the tourism industry out of a recession.”
He went on: “Ryanair has repeatedly shown, the tourism industry can only grow and thrive if it has lower access costs and not idiotic regressive taxation which hits the poorest, most price sensitive passengers, and makes UK tourism an increasingly unattractive option.”