US says planned new plane tax ‘illegal’
11.05.08
The US government has launched a 'blistering attack' on the planned new £2.5 billion aviation duty, questioning its green credentials and claiming that it breaks international law, the Times reports. The criticism was made in an official diplomatic note sent to the Foreign Office by the US embassy in London last month. It said the new tax, proposed in this year’s budget as a replacement for air passenger duty (APD) and to be introduced next November, ‘raises significant policy and legal issues’ and asks whether it can be justified when the government plans a third runway at Heathrow, the newspaper adds.
The new flight levy, which the Treasury says will help reduce greenhouse-gas emissions from aviation, is proposed as a replacement for APD. The Treasury wants to change the basis of the duty, moving it from individual passengers to a per-plane basis. The move will increase average charges for passengers and could raise £2.5 billion a year for the treasury - none of which is to be spent on environmental projects.
The US note said the switch from passengers to planes as the basis for the taxation contravenes the 1944 Chicago Convention, the treaty that governs most of international aviation. It adds that it is also in breach of the open-skies agreement hammered out last year between Europe and America and launched in March.
The Times reports that the US also query the basis of the duty, saying the green claims are farfetched. The note says: ‘The Treasury’s proposal, although cast as an environmental measure, appears in reality to constitute nothing more than a device for generating additional revenue from the airline community.'
It adds that the duty is likely to reduce the number of flights from the UK, and that ‘this would seem an anomalous result, given the focus in the UK on, among other things, restoration of the competitiveness of Heathrow with the opening of terminal 5 and the consideration of a third runway.’
'US government sources' told the newspaper that Washington could bring a case against the UK at the International Civil Aviation Organisation, the watchdog for world aviation, or under the disputes procedure of last year’s EU-US open-skies agreement.
The Times says that John Byerly, deputy assistant secretary for transportation and America’s top aviation negotiator, met Treasury officials last week to press home the argument.
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